ZYTrade Editor: It’s a sad chapter in American business history, as 2020 marks one of the highest levels of retail bankruptcies and store closures. Note that these numbers don’t reflect layoffs, which can only worsen the outlook. Also, most of these businesses occupy the “discretionary” end of consumer spending. What will the impact of these lost jobs and businesses be to our overall economic health?
In the first six months of 2020, 18 retailers filed for Chapter 11 bankruptcy, with an additional 11 filing in July through mid-August . These defaults were concentrated in apparel and footwear, home furnishings, food and department stores, with many prominent retailers filing during this time period, including Pier 1, J. Crew, Neiman Marcus, Stage Stores, J.C. Penney, Tuesday Morning, GNC, Lucky Brand, RTW Retailwinds (New York & Co.), Brooks Brothers, Ascena (Ann Taylor, LOFT, Lane Bryant, Justice, Catherines), Le Tote (Lord & Taylor), Tailored Brands (Men’s Wearhouse, Jos. A. Bank, Moores Clothing, K&G) and Stein Mart.
From January through mid-August, there have been more store closure announcements in 2020 than the record 9,500 stores that closed throughout 2019. The majority of store closures have taken place in malls, which have seen far less foot traffic due to sustained COVID-19 disruption.
2020 is on track to set the record for the highest number of retail bankruptcies and store closings in a single year. Based on the trends set through mid-August, our expectation is that more retailers will struggle to navigate the effects of the pandemic—particularly those that are highly levered and mall-based.
Not Just Bankruptcies
Retailers on the brink of bankruptcy are not the only ones looking to shed their brick-and-mortar locations. In fact, there are more than 15 retailers that have not filed for bankruptcy—including Macy’s, Bed Bath & Beyond and Gap—that have announced the closing of 50 or more stores, totaling a combined 4,200+ stores.
Lord & Taylor, Brooks Brothers, Pier 1, J. Crew, Neiman Marcus, J.C. Penney, Tuesday Morning, GNC, Ascena (Ann Taylor, LOFT, Lane Bryant, Tailored Brands (Men’s Wearhouse, Jos. A. Bank, Moores Clothing, K&G) and Stein Mart are among the prominent bankruptcies.
Anchor Stores
JCPenney, Neiman Marcus, Lord & Taylor, and Sears are (or were) examples of mall anchor stores.
Nordstrom and Macy’s are struggling.
Consider this July 1 headline: Nordstrom cuts 6,000 jobs, reduces workforce nationwide amid 40% decrease in sales.
Malls are not what they used to be and never will be again.
Originally posted on The Street
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