With temporary closures, mandatory stay-at-home orders, and social distancing requirements, the coronavirus pandemic has been hard on businesses. Unfortunately, some of them may not be able to withstand the devastating blow that the pandemic has created. That being said, here are ten companies that might not make it out of the pandemic alive.
Sears was already on the brink of closure prior to the coronavirus outbreak, so it comes as no surprise that this brand might not survive the pandemic. In fact, Sears has been continuously and permanently closing stores for years, even after emerging from bankruptcy some time ago. By the end of February it was down to 182 stores. Meanwhile, Sears announced in early April that it would close all its locations through at least April 30 in response to the coronavirus outbreak. Whether those locations will reopen after the pandemic passes remains to be seen.
9. Craft Breweries
According to an article published by The Daily Beast, the coronavirus could put thousands of craft breweries in America out of business. “The disease has broken the long growth curve of craft beer, which had outperformed the overall category for more than a decade — and it only took a month,” the article reads. In April, craft beer lost almost 2.5 percent of total beer volume, while hard seltzer and flavored malt beverages, like hard lemonades and teas, rose an additional 2 percent.
In the wake of the COVID-19 lockdown, taprooms, brewpubs and specialty bars are struggling to pay the bills. Not only that, but they have millions of gallons of draft beer just sitting there waiting to expire. As a result, some breweries have been scrambling to sell their inventory. Unfortunately, a lot of it won’t get sold. According to the article, “they’re already being taken back, repackaged and distilled for hand sanitizer or whiskey, or just dumped, and all of that is at a loss for the brewer.”
Does this mean that all craft breweries in America will close? Not likely. But, according to a survey conducted by the Brewers Association, an estimated 3,600 of the nearly 8,000 breweries in America may close their doors after it’s all said and done.
This car rental company has been struggling with a lack of income now that nonessential travel has been put on hold. According to an article published by 24/7 Wall St., the company was considering bankruptcy to restructure an estimated $17 billion in debt. Hertz reached an agreement with its lenders that would give it until May 22, 2020, to come up with a financing strategy and structure that better reflects the impact the COVID-19 global pandemic has had on the economy.
7. Neiman Marcus
The Neiman Marcus Group was the first major retailer to topple during the current pandemic. As a result, the retail giant filed for bankruptcy in early May. In a letter to customers, Geoffroy van Raemdonck, CEO of Neiman Marcus Group Inc., noted that the company would not be liquidating and will reopen stores once it’s safe to do so. “This is simply a process that allows our company to alleviate debt, access additional capital to run the business during these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term,” he said.
6. Direct-to-Consumer Startups
Direct-to-consumer, or DTC or D2C, simply refers to selling products directly to consumers, bypassing any middlemen (e.g. wholesalers, third-party retailers, etc.). According to Harvard Business Review, DTCs rose out of an environment of abundant venture capital, low competition, and social media advertising. But, today, these companies will have to undergo some changes if they are to survive the economic recession that is said to follow the COVID-19 pandemic. That’s because consumer spending has declined since the world shut down, and, unfortunately, e-retailers were among the hardest hit.
Their woes aren’t all due to the global shutdown, however. In fact, many DTC companies were in trouble before the pandemic hit. The issue now is whether these startups will survive the looming recession. If they want to, they will have to “have cash on hand, continue to innovate, and stay relevant to customers,” Fast Company said on its website.
5. Norwegian Cruise Line
It should come as no surprise that cruise ships are struggling during the current pandemic. After all, many people who were traveling on them ended up contracting COVID-19. Not only that, but cruise ships are known for being filthy. Plus, all U.S. cruises were hit with a no-sail order. That being said, Norwegian Cruise Line, headquartered in Miami, said in a May 5 filing that there was strong doubt about the company’s ability to continue in the wake of the coronavirus pandemic. Prior to the crisis, Norwegian Cruise Line’s stock traded at more than $50 per share. It’s currently trading at less than $13 per share.
4. Gold’s Gym
With mandatory stay-at-home orders and bans on gatherings of more than 10 people, many folks have started working out at home. As a result, many gyms have suffered. And, Gold’s Gym is no exception. The gym filed for bankruptcy in early May and permanently closed 30 company-owned locations amid the coronavirus pandemic, although its CEO Adam Zeitsiff reassured customers that the gym would eventually reopen. In fact, some locations have already started reopening with enhanced safety measures in place. But, the question that remains is, will customers feel safe enough to be in close proximity to other gym customers or will they continue to play it safe at home? Time will tell.
3. AMC Theaters
According to 24/7 Wall St., AMC Theaters was reportedly considering entering bankruptcy in April. They have avoided it so far and have actually turned their attention to raising much-needed funds through a private placement debt offering. Unfortunately, with AMC Theaters closed since mid-March, ticket sales have been $0. And, with no money rolling in, things are starting to look pretty bleak. But, there is one possible solution: convert all or some of their locations to drive-in theaters. Believe it or not, drive-in movie theaters have been making a comeback due to the coronavirus pandemic, and this could be just what AMC Theaters needs to turn business around.
2. Steak ‘n Shake
Steak ‘n Shake restaurants were already in trouble prior to the coronavirus outbreak. In fact, they had already closed down some of their locations and had reported an operating loss of $18.6 million in 2019. Then, with sales continuing to decline due to the pandemic, the chain decided to temporarily close over 100 locations in February and convert them into counter-service only restaurants. What’s more, is that it has a $181.5 million loan that’s coming due in 2021. As for what the future holds for this chain, well, no one really knows that just yet.
1. Party City
With bans on large gatherings and social distancing measures in place, it’s a wonder Party City can stay afloat this long. That’s due in part to the fact that some locations are offering curbside pickup. But, since that start of the pandemic, Party City’s stock has been down to about $0.50 per share. Not only that but its potential earnings is pretty much nonexistent. As of early May, all Party City locations remain closed, and there’s no word as to when or if they’ll reopen.
Are there any other companies you think might not survive the pandemic? Let us know in the comments below.