Theo Thimou, Clark.com
The year 2018 has gotten off to a bad start for retail, with Toys R Us announcing the closure of nearly all its U.S. stores. Meanwhile, Sam’s Club, Macy’s, Sears, Bon-Ton and others have all announced new rounds closures in a year that’s only one quarter done!
As the retail industry continues ailing — led by more shoppers looking for deals online and shopping at off-price chains — we’re gearing up for a year chock full of expected bankruptcies.
RELATED: 2018 store closure list
14 stores on the brink of bankruptcy
Last month, struggling department store Bon-Ton announced that it had entered bankruptcy and may wind down operations over the new few weeks.
Now the latest shoe to drop on the bankruptcy watch has been teen retailer Claire’s.
The mall-based purveyor of tween jewelry trends and ear piercings announced the news in a March 19 press release.
Fortunately, Claire’s looks like it will escape the liquidation fate that’s befallen Toys R Us.
The company plans to shed $1.9 billion in debt and hopes to emerge from bankruptcy as a “healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners, and franchisees.”
But bankruptcy is still a fate that awaits many other retailers in 2018. Here’s a look at who’s likely to turn up in bankruptcy court as the year goes on, according to S&P Global Market Intelligence.
|STORE||PROBABILITY OF DEFAULT IN 2018|
|Sun Pacific Holding Corp. (formerly EXOlifestyle)||44.38%|
|Sears Holding Corp. (Sears and Kmart)||25.37%|
|Vince Holding Corp.||17.94%|
|Bebe Stores Inc.||10.17%|
|Destination Maternity Corp.||9.34%|
|Destination XL Group Inc. (big and tall men’s apparel)||8.78%|
|Stein Mart Inc.||8.24%|
|Christopher & Banks Corp.||8.04%|
|Sears Hometown and Outlet Stores Inc. (Sears Outlet)||7.23%|
|DGSE Cos Inc. (Dallas Gold and Silver Exchange)||6.50%|
|Burlington Stores Inc.||5.96%|
|Tailored Brands Inc. (Men’s Wearhouse, Joseph A. Bank)||5.69%|
|Clarus Corp. (formerly known as Black Diamond)||5.36%|
Some names on this list like Sears Holding Corp. and Bebe Stores announced store closures in 2017 and 2018. Other names — such as Sun Pacific, Razer and Clarus — are manufacturers first and have a small retail footprint that’s almost an afterthought.
Both no matter which camp they fall into, all these retailers face the same core problems.
Those troubles include declining store traffic, liquidity issues, management challenges, weakened competitive positions, ailing credit ratings, exposure to unfavorable borrowing terms, highly promotional pricing that cuts into margins and supply chain interruptions.
That final factor is particularly distressing for those stores that are fast-fashion retailers. Such retailers live and die by being able to get the hottest trends into stores as quickly as possible.