1. J. Crew
The clothing company favored by former first lady Michelle Obama has been closing some of its stores due to plunging sales over the years. It also closed its bridal store and parted with its creative director, Jenna Lyons, and CEO, Millard “Mickey” Drexler. Drexler confessed he thought the company’s troubles stemmed from raising prices.
Specifically, Drexler pointed out J. Crew raised prices and underwent expansion during years when consumers became more and more thrifty. Drexler left his position of 14 years and was succeeded by former West Elm CEO Jim Brett. After suffering under $2 billion debt, a debt exchange in June offered the company some relief. Sears, on the other hand, isn’t as lucky.
2. Sears Holdings
Sears Holdings has undergone trouble for a decade, with their sales continuing to decline. It sounds like they’ve tried nearly everything — cost cuts, asset sales, store closures, and layoffs — but RetailDive says this hasn’t helped the giant department store out too much. Finally it’s had to file Chapter 11 bankruptcy October 2018, closing 142 stores in the process.
In an attempt to try and avoid bankruptcy, CEO Eddie Lampert’s hedge fund has loaned hundreds of millions of dollars to Sears Holdings (with interest, of course). Things aren’t looking too bright for the retailer, even a hedge fund couldn’t keep it afloat. Like 99 Cents Only, they might be suffering from competition in the market.
3. 99 Cents Only
The retailer offering discount goods has found itself between a rock and a hard place, facing competition from companies like Dollar General, Dollar Tree, and Walmart. In December 2017, the company reported a net loss of $27.1 million on top of $33.6 million in losses the second quarter and $8.8 million in Q1.
The 35-year-old company had tried to turn things around years prior. It was sold to Ares Management, Canada Pension Plan, and a private family. It also got itself a new CEO, Jack Sinclair, who replaced Geoffrey Covert. Although reporting positive same-store sales, 99 Cents Only is still losing a lot of money just like vitamin retailer, GNC.
RetailDive says that the supplement supplier’s top-line revenue in 2017 fell 3.4 percent year over year to roughly $2.5 billion. All the while, it carried $1.3 billion in debt. GNC’s chief exec said that it was doing well in China and in e-commerce in Q2 2018.
However, also in Q2 2018, GNC said it had declines in top-line and comparable sales as well as profits. In February 2018, the company said it would sell 40 percent of the company to a Chinese pharma company. The pharma company will manufacture, market, sell and distribute products in China. Top-lines sales have also taken a nosedive at Fred’s.
5. Fred’s Pharmacy
In May 2018, the 70-year-old pharmacy said its top-line sales for the past fiscal year fell 4.3 percent and its net loss was at $139.3 million. Fred’s tried to pursue 1,000 stores, increasing from 600, but plans didn’t quite work out. Extra store spaces were ripe for the taking, according to RetailDive.
This extra space was available as Walgreens tried to get a deal with Rite Aid but that fell through. Fred’s CFO then left February 2018, putting a former media exec in as their replacement. “Plan B” was put into place — Fred’s went up for sale, selling CVS its specialty pharmacy for $40 million. A huge maternity retailer also had exec shakeups when things turned sour for them.
6. Destination Maternity
Destination Maternity is huge in the maternity apparel industry with more than 1,000 stores according to RetailDive. Its CEO left during a quarter last year when top-line sales fell over 7 percent. With the company on its second interim CEO, the company brought on Berkeley Research Group to help it turn around.
Destination Maternity guessed that a relationship break from Kohl’s was the root of its issues. In total during 2017’s fiscal year, the retailer saw sales fall 6.3 percent year over year to $406.2 million. There was some light at the end of the tunnel — it saw a 40 percent increase in e-commerce comps. Ascena’s case is more hopeful.
7. Ascena Retail
This retailer is in charge of companies like Ann Taylor, Dress Barn, LOFT, and Lou & Grey. Things haven’t been going well, even after bringing in a new chief for Dress Barn. To salvage the brand, it’ll shutter 25 percent of its Dress Barn stores by 2019, says website RetailDive.
The retail news site also reported that Ascena saw $1.7 billion in sales in fiscal year 2017. In March, the retailer said that top-line sales fell year over year. However, financial services company Moody’s said in May that Ascena “is on a path to developing a strong ‘backbone’ of retail capabilities.” Stein Mart has struggled too but is also on a good path.
8. Stein Mart
The Jacksonville-based discount department store has struggled with its sales but is seeing some glimmers of hope! Stein Mart’s sales stabilized and digital sales grew by 47 percent in the third quarter of 2017. It did announce $23.4 million net loss for the year, but said it shrunk its loss size to about 10 percent.
Looks like we may not have to worry about our discount goods going away! At the beginning of the year, Stein Mart had announced it hired advisors to help turn the chain around. It was able to close on a $50 million term loan this March, according to RetailDive, which could be increased. Unlike Stein Mart, JC Penney’s future looks bleak.
9. JC Penney
Things aren’t looking too good for the department store chain, but it has been performing better than Sears. In 2018, 1,000 employees were laid off and a distribution center closed. Top-line sales dropped 0.3 percent in 2017 with net income at $116 million. RetailDive says the company is having a hard time making a turnaround.
A big factor in the way of its turnaround is its total debt of $4.2 billion. RetailDive says JC Penney investors are growing impatient with the slow progress. It had many other changes to its executive makeup including its CEO. Marvin Ellison left his post as board chairman in May 2018 to lead Lowe’s. Perhaps they should consider a change in offerings like Office Depot?
10. Office Depot
The office supply retailer saw some tough times in 2017 with sales falling 7 percent to $10.2 billion. Its CEO Gerry Smith announced Office Depot would be making a shift from mostly retail sales to also include services. RetailDive says the new emphasis is pushing up the company’s top-line.
One of Office Depot’s new business to business services is the “BizBox” subscription program. This includes more services rather than products. Investing in its service also includes the acquisition of IT firm CompuCom. Services now include 14 percent of the retailer’s sales. Vitamin Shoppe has also tried to shift its company’s focus.
11. Vitamin Shoppe
Vitamin retailers do not seem to be doing too well — like GNC, Vitamin Shoppe has also struggled with its sales. But, also like GNC, it is strengthening its e-commerce business and has started offering a subscription service. Despite this, the company has seen its top-line fall 8.5 percent in 2017 to roughly $1.2 billion.
RetailDive attributes the struggles seen by Vitamin Shoppe and GNC to lessening popularity of malls and supplement store competition. Vitamin Shoppe is hoping to turn things around with category expansion, events, delivery services, and more. Neiman Marcus isn’t making as big of a turnaround, however.
12. Neiman Marcus
The luxury clothing retailer’s gross sales fell 5 percent to $4.7 billion in fiscal year 2017. Neiman Marcus tried a couple things that RetailDive said seemed to be paying off, but still its interest expenses are troublesome. Some suggested strategies were cutting over 200 jobs and developing a customer engagement plan called “Digital First.”
Canadian company Hudson’s Bay considered buying the luxury retailer Neiman Marcus. Sources told the WSJ that the companies were in talks in March. However, in the end, the acquisition plan didn’t work out because Hudson’s Bay was concerned about Neiman Marcus’ declining sales. Bebe is another clothing store affected by declining interest in malls.
The fashion retailer’s sales began to suffer after its creative director, Neda Mashouf, left after divorcing her husband in 2007. Her ex-husband Manny Mashouf founded the company in 1979. RetailDive also attributes declining mall popularity and other retail challenges as negatively affecting Bebe. In 2017, it had an operating loss of $4.6 million.
Bebe decided to attempt to stay afloat by moving away from the traditional retail space. It moved into strictly e-commerce only by paying out $65 million to get rid of its physical retail stores. Forbes said Bebe had 180 stores at the end of 2016. Bebe’s problems are common for retail but Pier 1 has a unique problem…
14. Pier 1 imports
The research and strategy firm Jeffries said in 2018 that Pier 1 is in for a “heavy investment year” as it addresses its “sourcing, merchandising, pricing, marketing, store ops, e-com, and supply chain.” Net sales fell in 2018 quarter one by 9.2 percent year over year to $371.9 million.
S&P Global analysts also downgraded Pier 1’s credit rating. Ouch! Another thing stacked against them is Trump’s 10 percent tariff against Chinese goods. Pier 1 said in a release that 60 percent of its goods are made in China. Pier 1 might have to figure out new strategies, but we hope it’s not similar to Lands’ End’s efforts.
15. Lands’ End
This retailer’s casual clothing, luggage, and home furnishings aren’t resonating with consumers as much anymore. Lands’ End’s association with Sears caused its original troubles according to CheatSheet. Sears branched off in 2013. The catalog items see strong sales, the website said, but Lands’ End’s former CEO Federica Marchionni made some fatal errors.
CheatSheet says one of these was the youthful Canvas brand aimed at fashion-forward consumers. Canvas hoped to feature clothing in “designer styles to relaxed looks.” The brand, although trendy, wasn’t able to get its core clientele onboard. Everyone’s favorite guitar supplier might have a better chance to rebound.
16. Guitar Center
As of 2018, the rock n’ roll supplier has about a year to refinance a debt of $900 million. Guitar Center has been in business for more than 50 years but seems like people are buying fewer and fewer guitars. CheatSheet says its electric guitar sales dropped 36 percent from 2005 to 2016.
Despite its financial troubles, the instrument retailer was planning on opening new stores and managed to avoid a crisis by doing an emergency loan negotiation. In an interview with Forbes, EVP of merchandising and e-commerce Michael Amkreutz says the company is in transition but still going quite strong.
17. Southeastern Grocers
Winn-Dixie grocery chain isn’t winning… Its operator, Southeastern Grocers, filed for Chapter 11 bankruptcy protection to restructure its debt. It lowered its debt by $600 million and closed nearly 100 stores. The company says it’s shifted its focus to rebranding and remodeling stores that are still open, which they hope will turn things around.
Southeastern Grocers, which also runs Bi-Lo, faces competition by big-box stores like Walmart and Target and e-commerce like Amazon.com according to CNBC. Southeastern is based in Florida but operates stores in other southern states like Alabama, Georgia, Louisiana, Mississippi, North Carolina, and South Carolina in addition to its home state.
18. Nine West
CheatSheet says the shoe retailer is $1.5 billion in debt and in negotiations to restructure its debt. Bloomberg reports that this includes Chapter 11 bankruptcy and selling off parts of the company. In order to save itself, Nine West has sold off its Easy Spirit brand and closed all of its stores except for a mere 25.
Also… The Washington Post reports Nine West Holdings will be shifting its focus from shoes to its jewelry and clothing lines (some include Anne Klein, Kasper Grouper, One Jeanswear Group). The Post says declining demand for ballet flats, sandals and heels have affected its sales. Changing consumer interest has also affected David’s Bridal.
19. David’s Bridal
As brides opt for more and more for casual, less expensive affairs, those in the wedding industry like David’s Bridal are seeing drops in sales. CheatSheet reports the company has a $520 million loan facility due in 2019 and $270 million in unsecured notes due in 2020. The new CEO, Scott Key, might do some debt refinancing.
The wedding dress superstore faces operational and market challenges; it saw sales, earnings and margins drop according to RetailDive. To add salt to the wound, S&P Global downgraded David’s Bridal credit rating in June 2018. They might have to find a new way to make a comeback like Bon-Ton.
This company had been around for a whopping 100 years! All good things must come to an end, however — or do they? Bon-Ton, an online retailer and department store, filed for bankruptcy in 2018 and was sold and liquidated. It announced in October 2018 that it relaunched its e-commerce site and will open select stores.
USA Today said: “The reinvented Bon-Ton would be a sleeker, more e-commerce focused business.” Started in 1898, Bon-Ton experienced its heyday in the 1900s and 2000s. CheatSheet says they were able to be successful as they were in small towns with little competition. Amazon changed things for them. Tops Market might benefit from observing customers’ preference for e-commerce.
21. Tops Market
A common cause of bankruptcy is companies not keeping up with changing consumer habits. This is the case with Tops Market according to CheatSheet. With more shoppers interested in non-traditional food retailers, falling food prices, and competition, Tops had to file for Chapter 11 bankruptcy. Shoppers can still visit Tops, however.
The East Coast grocery chain will keep most stores open (for now) in New York, Pennsylvania, and Vermont. The Buffalo News offers us a glimmer of hope for Tops, reporting in July 2018 that the company has been freed from the $80 million in annual interest payments it had to deal with in 2017.
22. Cole Haan
The luxury footwear brand made the list on USA Today — but not a list companies want to be on… USA Today named Cole Haan one of the 26 retailers most at risk in 2018. The company is trying to appeal to the athletic shoe brand trend by changing its image from dress shoes to sneakers.
Cole Haan used to be owned by an athletic shoe company, Nike. It was sold to Apax Partners in 2013 and also abandoned Nike’s comfort technology. Cole Haan had built sneaker comfort into its dress shoes. It’s now competing with its former parent company and USA Today says it’s not making headway… Neither is Charlotte Russe!
23. Charlotte Russe
The women’s wear retailer is self-described as “fashion that’s trendy, not spendy!” But it looks like not enough shoppers are spending at Charlotte Russe. CheatSheet reports that the company is facing $90 million in debt and in December 2017, it tried to get a break on its store rents to avoid bankruptcy.
Originally founded in 1975, Charlotte Russe was able to be updated by S&P Global after it shed some debt. A $214 million loan helped the retailer get into good graces. However, S&P Global analysts did think that Charlotte Russe needed to improve its performance, otherwise, the company’s outlook still looks bleak. Claire’s is another fashion retailer with issues.
Claire’s has been a fond memory in many women’s formative years. It was a staple store in any mall where girls bought jewelry, accessories, and got their ears pierced. However, the store, founded in 1961, might not be a part of future young girls’ childhoods anymore as it stopped its IPO.
CheatSheet said this indicated a 2018 bankruptcy might happen — and it did. In March 2018, the accessory retailer filed for Chapter 11 bankruptcy and planned to reduce its debt by $1.9 billion. It closed 130 stores by May 2018 and plans to markets itself to potential buyers and investors.
25. FullBeauty Brands Holdings Corp
FullBeauty owns brands for plus-size men and women such as fullbeauty.com, Woman Within, Roaman’s, Jessica London, ellos, KingSize, and Brylane Home. It’s one of those retailers that also blames e-commerce giant Amazon for its troubling sales… FullBeauty, owned by Apax Partners, included this message to its lenders in 2017.
The company told its lenders that its earnings dropped 30 percent during the 2017 fiscal year’s first quarter. FullBeauty did have a shake-up of its executive team in July 2018, bringing on Bob Riesbeck as CFO, Liz White as chief customer officer and Robert Lepere as chief people officer. A press release said they’d lead the company into more growth.
26. Eddie Bauer
The outdoor company faced problems with debt. In 2017, the Bellevue-based company’s owners (Golden State Capital) considered a sale as one of many strategies to rid its debt. That same year, S&P Global downgraded the retailer’s credit rating. This isn’t anything new for the company — it did manage to emerge from bankruptcy in 2009.
Its sale to Golden State Capital in 2009 saved it from bankruptcy. Nasdaq argues the brand has struggled to keep up with trends. However, the stock exchange says that it’s no longer concerned about Eddie Bauer — the outdoors retailer is exploring a merger with Pacific Sunwear of California. Wonder if Bluestem Brands will try a merger?
27. Bluestem Brands
Bluestem Brands provides apparel, appliances, electronics, health, and beauty products. It owns 13 e-commerce sites such as Appleseed’s, Bedford Fair, Fingerhut, Draper’s & Damon’s, Blair, and Gettingon.com. Business Insider put the company on its list of at-risk companies. A press release on BusinessWire in June 2018 showed some decreasing numbers…
In this press release, Bluestem had reported its 2017 numbers. It said it had a 10.9 percent decrease in net sales compared to the first quarter of fiscal year 2017. Its net sales were $381.1 million. Its adjusted net sales excluded exited businesses decreased 5.1 percent compared to fiscal year 2017’s first quarter. PetSmart is faring better it seems.
28. PetSmart Inc.
The pet goods retailer has more than 1,500 stores in the U.S., Canada, and Puerto Rico. In June 2018, PetSmart decided it needed restructuring advisors to handle its $8 billion debt problem. It won’t face debt maturities until 2022 according to Reuters. The root of the problems is the same as other stores.
Consumers are taking advantage of e-commerce more and more due to its convenience and sometimes lower prices. PetSmart also suffered from the same problems. It did acquire an e-commerce site, Chewy, but paying $3.35 billion for the site added to its existing debt. This was the highest ever paid for an e-commerce site says Reuters.
The shoe retailer filed for Chapter 11 bankruptcy protection, laid off employees and shuttered over 600 of its stores in 2017. Payless was able to come back successfully reorganized in August 2017 but S&P Capital Markets says it is still in danger of default.
Despite closing down hundreds of stores, Payless has a lot of stores to manage as well while getting back on its feet — 3,500 in fact! “We have accomplished our goals of strengthening our balance sheet and restructuring our debt load, positioning Payless to create substantial value for our stakeholders,” said CEO Paul Jones in 2017.
30. BKH Acquisition Corp.
This is the company that operates over 100 Burger Kings in Puerto Rico through its subsidiary, Caribbean Restaurants. In 2017, the company was included in a list on the Distressed Company Alert, a division of New Generation Research, Inc. BKH Acquisition Corp was given a “low rating” in their report.
S&P Global Ratings actually lowered its credit rating of the company from CCC+ to B- on January 11, 2017. This rating is given when S&P considers a business to be vulnerable. Credit analyst Olya Naumova explained the downgrade, crediting to Puerto Rico’s persistent economic weakness in the face of its ongoing credit crisis.