14 Stores That Might be Heading for Bankruptcy


Bankruptcy

Last year we told you about Sears and Kmart stores declaring bankruptcy and about a host of other stores that were closing. And, now some more very prominent U.S. retailers have announced store closings or declared bankruptcy. Are there more to come? Moody’s says there might be. Keep reading to find which ones could be next.

14. David’s Bridal

Davids Bridal
Source: Wikimedia Commons By hattiesburgmemory [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]

Sales started falling for this company after women began opting for casual wedding dresses over traditional wedding gowns. As a result, David’s Bridal filed for Chapter 11 bankruptcy protection back in November. At the time, they vowed to keep all stores open during this restructuring period. Fortunately, the company reduced its debt by about $450 million and was able to emerge from bankruptcy in January. The problem, however, is that David’s Bridal is struggling to evolve and build an online presence. They’re also faced with the fact that many millennials aren’t in any rush to get married.

13. PetSmart

Petsmart
Source: Wikimedia Commons By M.O. Stevens [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]

A couple of years ago, PetSmart acquired Chewy.com–an online retailer of pet food and other pet-related products–for $3.4 billion, but has since struggled to pay down its nearly $8 billion debt, as its online competition–Amazon, Target, Walmart, etc.–continues to thrive. In fact, Amazon is a big reason why the company is struggling. That’s because the e-commerce giant launched Wag–a brand of pet products–in 2018. Unlike PetSmart, “Amazon’s pet food sales are likely to experience a lot more growth before leveling off,” Mike Corry, vice president of sales at data and advisory firm Edge by Ascential, said last year, according to Kiplinger.com.

12. Dollar Tree

Dollar Tree
Source: Wikimedia Commons By Corey Coyle [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)]

After acquiring Family Dollar in 2015, Dollar Tree has seen a decrease in its earnings. It’s “clear that Family Dollar is underperforming, both as a division and within the wider market,” Neil Saunders, managing director at GlobalData Retail, wrote in a note to clients early last month, according to Business Insider. “The continued problems at the Family Dollar division have resulted in an impairment of its brand value to the tune of $2.73 billion. Such a deterioration undermines some of the economics on which the acquisition and integration of Family Dollar were based,” he added.

Last month, Dollar Tree announced that it was closing nearly 400 Family Dollar stores in 2019. This comes on the heels of 85 closings during the fourth quarter of 2018.

11. 99 Cents Only Stores

99 Cents Only Stores
Source: Wikimedia Commons

While this chain, which operates 389 locations in California, Texas, Arizona and Nevada, hasn’t been struggling to make money, it has been losing money due to operating costs–not to mention the stiff competition it faces from its rivals, Walmart, Dollar General, and, yes, even the struggling Dollar Tree chain. Another factor in this store’s struggles is the 2012 acquisition of the company by Ares Management (ARES) and the Canada Pension Plan Investment Board that left it nearly $1 billion in debt, much of which is coming due this year.

10. Toms Shoes

Toms Shoes
Source: Pixabay

Earnings for this casual footwear brand have declined nearly 50 percent since 2014, when Bain Capital purchased a 50 percent stake in Toms Shoes for a whopping $313 million. Competition from both online and offline stores that offer more of a selection at lower prices is partially to blame for the company’s struggles. More than just a brand name of casual footwear, Toms also operates 10 stores of its own. “Both sides of the business are struggling; Toms as we know it might not survive without a major restructuring of its debt,” Kiplinger.com said in an article on its website.

9. Pier 1 Imports

Pier 1 Imports
Source: Wikimedia Commons By v343790 [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)]

According to Kiplinger.com, Shania Khan, CEO of FLP Consulting Group, says the problem with Pier 1 Imports, and stores like it, is that it just isn’t giving customers a reason to come in and shop. There are “no exciting experiences being created in-store for the customer to want to patronize the store. No social media moments, pop up shops, supporting local artists, etc.,” she added. Meanwhile, analyst Raya Sokolyanska points out after seeing Pier 1’s third-quarter fiscal 2019 results that a turnaround will be a bit of a challenge for the company. “We expect overall liquidity to be adequate in the next 12-18 months, supported by the large revolver and lack of near-term maturities, however liquidity will weaken over time if earnings do not recover,” Sokolyanska wrote, according to an article published by MSN.

8. Neiman Marcus Group

Neiman Marcus
Source: Wikimedia Commons

Following a couple of buyouts by Ares Management and Canada Pension Plan Investment Board from other private equity firms, Neiman Marcus Group now faces a huge debt–nearly $5 billion worth of debt, to be exact–that is due this year (at least most of it anyway) but has yet to be paid. This news comes about despite the fact that Neiman Marcus Group has reported positive sales earnings for five consecutive quarters following years of losses. Fortunately, after word of the company’s possible demise spread, the majority of its creditors agreed to extend the maturity debts on the loans by another three years.

7. J.Crew Group

J.crew
Source: Wikimedia Commons

The troubles continue to rack up for this company, who was already $1.7 billion dollars in debt the middle of last year, as its CEO stepped down in November 2018–after a little more than a year on the job. Unfortunately, no replacement has been named as of yet. Additionally, the company is trying to rebrand its stores in an attempt to reverse years of sagging sales. Either way, “if the departure of [CEO] Jim Brett hails the return of these unrealistic attitudes (that its merchandise was more marketable than it actually was), J.Crew is going to slip back and undo all of the progress made to date. Given the precariousness of its financial position, this is a mistake it cannot afford to make,” Neil Saunders, managing director of GlobalData Retail, wrote about the CEO’s resignation, according to Kiplinger.com.

6. BevMo!

Bevmo
Source: Wikimedia Commons By Binksternet [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]

Originally known as Beverages & More, BevMo! mainly sells alcoholic beverages but also offers a variety of services, including party planning and wedding registry services. Still, they’re having a tough time getting customers to part ways with their hard-earned money. The company’s performance is under pressure from growing competition. As a result of its soft performance trends, the company recently received a CCC+ (down from a B-) credit rating from Standard & Poor’s. Moody’s also downgraded BevMo!’s rating mid-2018 to Caa1.

5. Bluestem Group

Bluestem
Source: Twitter

You may not recognize the name, but you’re sure to recognize one of the many subsidiaries it owns–Fingerhut, for one. The fact that Bluestem Group operates so many subsidiaries is the reason–or at least one of the reasons–why it’s struggling financially. Even Bluestem seems to agree with that notion, as the company announced in January that it would shed six of its brands. This came after Moody’s downgraded Bluestem’s rating last year to Caa1. And, with its debt coming due in 2020, things aren’t looking too good for the Pennsylvania-based corporation.

4. Fairway Group Holdings Corp.

Fairway
Source: Wikimedia Commons By Meverbeaver [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)]

Facing stiff competition from Whole Foods, Trader Joe’s and others, Fairway Group Holdings Corp. is struggling due to its lack of scale. “Without the capital to effectively conduct promotional and marketing activities in a highly competitive market, Fairway’s top-line growth will prove elusive, and cash flows, liquidity and profitability will remain strained,” Moody’s analyst Mickey Chadha wrote in a note in November, according to an article published by MSN. “Despite the lower debt burden following the company’s emergence from bankruptcy in 2016, and the recent amendment to extend maturities of its term loans, we believe Fairway’s capital structure remains unsustainable given weaker than anticipated operating performance,” Chadha added. Additionally, Fairway is expected to face even more competition as it’s expected that other stores will continue opening in its markets, Chadha also said.

3. Guitar Center Holdings

Guitar Center
Source: Wikimedia Commons By Mike Prosser [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]

The fact that electric guitar sales dropped by a third between 2007 and 2017 is just one reason why Guitar Center Holdings is struggling. Another reason is that the company is feeling the heat from competitors like Amazon. In fact, its earnings have been declining over the last five years. And, in 2018, Standard & Poor gave the company a debt rating of CCC-, which, translated, simply means that default is unavoidable and there’s little chance of the company recovering. Still, that didn’t stop Guitar Center from trying to stay afloat. Last year, the company spent $5 million to overhaul a flagship store in Hollywood.

2. Save-A-Lot

Save A Lot
Source: Wikimedia Commons By Michael Rivera [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]

This discount grocery chain, which was acquired from SuperValu by Onex Corp., a Canadian private-equity firm, back in 2016, is feeling the sting from rivals such as Aldi, Kroger, Walmart, and Amazon. According to Kiplinger.com, Chadha says that “the company’s operating performance is expected to remain weak for the next 12 months as management initiatives will take time to gain traction as improvements in revenue and profits will be difficult to achieve in the increasingly competitive hard discount grocery space.”

1. Indra Holdings Corp.

Totes Isotoner
Source: Twitter

Like other brick-and-mortar companies, Indra Holdings, the parent company of Isotoner and Totes, is feeling the heat from online rivals. It’s also facing growing competition from retailers like Walmart and Target. And, according to Shania Khan of FLP Consulting Group, the Totes brand is losing relevancy with customers. To make matters worse, Moody’s gave Indra Holdings a rating of Caa3. This particular rating makes it hard, not to mention costly, for the corporation to secure credit. This is definitely a catch-22 situation, and it seems as though Indra Holdings will have a tough time pulling itself out of this one.

CONCLUSION

What do you think about all of these store closings and bankruptcies we’ve been hearing about lately? Sound off in the comments below! Thanks for reading.

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