These Dying Retail Stores Will Go Bankrupt in 2018
With crippling competition from Amazon and Walmart, retail stores are struggling. Over 50 major chains went bankrupt last year, including Toys “R” Us and Payless Shoes. That’s up from 47 filings in 2016 and 30 in 2014. So, what’s in store for the future? The following retailers are in grave danger of bankruptcy. One famed 100-year-old will likely go bankrupt by the end of the year.
1. Land’s End
By the numbers: Land’s End is at risk of defaulting on a $498 million loan.
Land’s End is suffering due to its former association with the beleaguered Sears, which spun off the company in 2013. While the catalog still sees strong sales, former CEO Federica Marchionni led Land’s End astray. She reintroduced the Canvas brand, which failed to resonate among core customers.
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By the numbers: GNC faces a massive $1.38 billion in long-term debt.
The specialty vitamin and supplement retailer saw its share price fall 66% during 2017, as investors lost confidence in its ability to adapt to the times. With only $40 million in cash on the books, GNC’s debt is due soon as the fall of 2018. A bankruptcy would likely prompt both investors and suppliers to flee.
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3. 99 Cents Only
By the numbers: 99 Cents Only saw an $8.8 million net loss in the first quarter of fiscal 2018.
The ailing Southwest discount chain, which operates 391 stores, is on Retail Dive’s list of 12 major retailers that could go bankrupt. As Bloomberg explains, 99 Cents Only is “scrambling to restructure junk-rated borrowings tied to its 2012 leveraged buyout.”
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4. Guitar Center
By the numbers: The company has about a year to refinance $900 million in debt.
Guitar Center has been around more than 50 years and is the world’s largest retailer of guitars and other musical instruments. Unfortunately, electric guitar sales dropped 36% from 2005 to 2016; today’s younger generation just isn’t buying guitars.
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By the numbers: The grocery chain closed nearly 100 stores this year.
The parent company of Winn-Dixie filed for Chapter 11 reorganization — lowering its debt by about $600 million — and closed almost 100 stores. Now, the grocery chain is focusing on rebranding and remodeling existing stores.
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6. Nine West
By the numbers: The shoe store has $1.5 billion in debt.
Nine West is in negotiations to restructure its debt, Bloomberg reported. This includes a Chapter 11 bankruptcy and selling off parts of its business, according to reports. Continuing to lose market share, it sold off its Easy Spirit brand and closed all but 25 stores.
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7. David’s Bridal
By the numbers: It has a $520 million loan facility due next year and another $270 million in unsecured notes due in 2020.
David’s Bridal faces operational and market challenges, with new CEO Scott Key hoping to execute some debt refinancing. In the first quarter of 2018, the bridal retailer saw sales, earnings, and margins fall, according to Retail Dive.
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8. J. Crew
By the numbers: The preppy apparel store faces $1.3 billion in debt.
J. Crew is another once-popular brand falling victim to decreased mall foot traffic and poor pricing decisions. Additionally, its debt, negotiated in a 2011 buyout, will continue to cripple the chain. J. Crew has teased a “relaunch” for late 2018, but details are pending.
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9. Sears Holdings
By the numbers: Sears must address a $134 million payment in the fall of 2018.
If the retail chain breaches its debt obligations, it’s in big trouble. As CNBC explains, “Sears CEO Eddie Lampert is making his biggest push yet to avoid bankruptcy,” proposing a selloff of its Kenmore appliance brand and home improvement business. Sears may also sell about $1.5 billion in real estate.
Next: This 100-year-old department store officially filed for bankruptcy.
By the numbers: The 100-year-old company had $1 billion in debt before bankruptcy.
Historically, Bon-Ton department stores were in smaller towns with little competition, but then Amazon appeared. The company, which operates Carson’s, Elder-Beerman, Herberger’s, and Younkers, filed for Chapter 11 bankruptcy in February 2018. It’s the largest retailer to go bankrupt in 2018 so far.
Update, 10/05/18: Bon-Ton rights may be acquired in an upcoming deal. According to USA Today, “The reinvented Bon-Ton would be a sleeker, more e-commerce focused business.”
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11. Neiman Marcus
By the numbers: The retailer is $4.8 billion in debt and has seen quarterly losses since the first quarter of 2017.
Luxury department store Neiman Marcus is among the retailers with the highest near-term bankruptcy risk (as high as 50%), according to CreditRiskMonitor. This is based on stock volatility, credit ratings, and financial metrics.
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12. Tops Markets
By the numbers: The company has acquired $265 million in loans.
As households move to nontraditional food retailers, Tops Markets is buckling under unsustainable debt fueled by falling food prices and stiff competition. The grocery retailer filed for bankruptcy on Feb. 21, 2018. It plans to keep operating its 169 supermarkets in New York, Pennsylvania, and Vermont.
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13. Cole Haan
By the numbers: USA Today identified Cole Haan as one of the 26 retailers most at risk in 2018.
Founded in 1928, the once luxe footwear brand prominently sells sports shoes. Can the parent company Calceus Holdings change with the times? The brand is sold in standalone shops as well as at Zappos, Nordstrom, Shoe Carnival, Macy’s, and other department stores.
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14. Charlotte Russe
By the numbers: Charlotte Russe faces $90 million in debt.
This budget women’s clothing retailer describes its brand as “fashion that’s trendy, not spendy!” This mall staple has seen better days, however. In December 2017, it sought to avoid bankruptcy by seeking a break on store rents. Only time will tell whether these efforts are strong enough to keep things afloat.
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By the numbers: Claire’s received a recent poor rating from Moody’s.
Countless women who grew up in the ‘80s and ‘90s recall getting their ears pierced at this teen-oriented jewelry store. Founded in 1961, it’s been a staple in malls for decades. However, it pulled the plug on its IPO, signaling a 2018 bankruptcy could be on the way.
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