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Retail


AS PANDEMIC STRETCHES ON, RETAIL BANKRUPTCIES APPROACH HIGHEST NUMBER IN A
DECADE

Published Mon, Aug 3 20202:50 PM EDTUpdated Mon, Aug 3 20204:29 PM EDT
Melissa Repko@melissa_repko
Lauren Thomas@laurenthomas

Key Points
 * 2020 is on track to have the highest number of retail bankruptcies in a
   decade, according to S&P Global Market Intelligence.
 * Le Tote, owner of Lord & Taylor, and Tailored Brands, parent company of Men’s
   Wearhouse, are the latest retailers pushed to the brink by temporary closures
   during the coronavirus pandemic.
 * 43 retailers have filed for bankruptcy so far this year, including many
   companies saddled with debt or struggling to resonate with shoppers before
   the pandemic.

Temporary closed signage is seen at a store in Manhattan borough following the
outbreak of coronavirus disease (COVID-19), in New York City, U.S., March 15,
2020.
Jeenah Moon | Reuters

As the coronavirus pandemic casts a long shadow over the U.S. economy, retail
bankruptcies are approaching their highest number in a decade.

Le Tote, owner of Lord & Taylor, and Tailored Brands, parent company of Men’s
Wearhouse, filed for bankruptcy Sunday. They’re the latest retailers pushed to
the brink by the pandemic.



The additions bring the total retail bankruptcy filings so far this year to 43,
according to tracking by S&P Global Market Intelligence.



With five months left in the year, there have already been more retail
bankruptcies this year than in the past eight years, according to S&P Global.
There were 48 filings by retailers in 2010, according to S&P Global, following
tremendous tumult and financial strain across the industry during the Great
Recession.

In 2008, 441 retailers filed for bankruptcy, according to S&P Global.

The pandemic has compounded challenges that some retailers faced even
before Covid-19 began to spread across the country. Some, such as Lord & Taylor
and J.C. Penney, were having trouble reaching new customers as e-commerce brands
won more of young shoppers’ attention and dollars. Others, like Neiman Marcus,
were saddled with debt.

Jan Kniffen, a retail consultant and former executive at The May Department
Stores, which was eventually folded into Macy’s, said for many of the retailers,
the pandemic only sped up their likely appearance in bankruptcy court.



Yet the coronavirus pandemic quickly pushed them over the edge. Shelter-in-place
orders temporarily shuttered stores for weeks. Americans’ spending habits
changed, as people coped with pay cuts and job losses or had less of an appetite
for new clothing because of working from home and attending few social
gatherings.

The pandemic could also weaken a typically busy shopping season for apparel
retailers: back-to-school. Families’ shopping lists could be shorter or have
different kinds of items, such as laptops and headphones, as school districts
plan for staggered schedules or remote learning. 

More bankruptcy filings are expected. The coming months will also reveal which
of the bankrupt companies will find a way to survive through new ownership or
restructuring — and which ones will be forced to permanently close stores and
liquidate inventory.

Kniffen said other retailers are at risk, including women’s apparel stores
J.Jill, Chico’s and Francesca’s and experiential toy retailer Build-A-Bear.

“If you’re heavily indebted, if you’re mall-based, if you’re selling something
people aren’t buying now because of Covid and if you’re not an essential
retailer, you’re at risk,” he said.

Here are some of the biggest retail bankruptcies so far this year, in order by
the date of filing. 

Zoom In IconArrows pointing outwards





PIER 1 IMPORTS

A pedestrian walks past a Pier 1 Imports Inc. store in New York.
Craig Varga | Bloomberg | Getty Images

The home goods chain Pier 1 Imports filed for Chapter 11 bankruptcy protection
on Feb. 17, listing $340.6 million in liabilities. 

Its plans to find a buyer were unsuccessful, as the pandemic hit, ultimately
pushing Pier 1 into a total liquidation. Pier 1 is, meanwhile, planning to sell
its intellectual property and other online assets to a firm known as Retail
Ecommerce Ventures, for $31 million, according to court documents. 


ART VAN FURNITURE

Art Van Furniture
Source: Art Van Furniture

The home goods chain filed for bankruptcy on March 8, listing liabilities in a
range of $100 million to $500 million. 

It planned to close most of its roughly 190 stores, but going-out-of-business
sales were stalled because of the pandemic. Those sales have since been able to
restart at select locations. Some Art Van stores are being replaced with a
company known as Levin Furniture. 


MODELL’S SPORTING GOODS

Modell’s Sporting Goods store in North Brunswick Township, New Jersey.
Michael Brochstein | SOPA Images | LightRocket via Getty Images

The sporting goods chain Modell’s filed for Chapter 11 bankruptcy protection on
March 11, listing liabilities of between $1 million and $10 million. At the
time, it said it planned to shut all of its roughly 140 remaining stores for
good, as the retailer was increasingly conceding sales to Amazon and suffered a
poor 2019 holiday season. 

The coronavirus pandemic, however, upended Modell’s going-out-of-business sales,
with retailers deemed nonessential forced to shut down for a period of time to
try to help curb the spread of the virus. Modell’s was later able to resume
liquidation over the summer. 


TRUE RELIGION

True Religion brand jeans
Source: True Religion

The denim brand True Religion filed for bankruptcy on April 13, listing
liabilities of between $100 million and $500 million. This was notably its
second time doing so in under three years. 

However, the company is expecting to emerge from bankruptcy later this year,
according to court documents, having amassed roughly $138.5 million in secured
debt and another $44 million that was owed to unsecured creditors. When it
filed, True Religion said it would have preferred to wait out the pandemic and
stay-at-home orders, but “simply could not afford to do so.” 


NEIMAN MARCUS

A Neiman Marcus department store stands next to empty parking lots at the King
of Prussia Mall which remains closed due to the ongoing outbreak of the
coronavirus disease (COVID-19) in Upper Merion Township, Pennsylvania U.S., May
21, 2020.
Lucas Jackson | Reuters

The upscale department store chain Neiman Marcus filed for bankruptcy on May 7,
listing liabilities of more than $1 billion. 

Neiman will close its recently opened store at the Hudson Yards mall in New York
City. It is also shutting two stores in Florida and one in Washington. A hearing
to approve Neiman’s business plan to emerge from bankruptcy has been pushed
back, as some of the retailer’s lower-ranking creditors have raised issue over
an asset transfer in 2018. When the company filed for bankruptcy, it had a
little more than 40 department store locations in the U.S. 


J.C. PENNEY

Signage is seen on a shopping cart inside a J.C. Penney Co. store in Peoria,
Illinois.
Daniel Acker | Bloomberg | Getty Images

The Plano, Texas-headquartered department store chain J.C. Penney filed for
Chapter 11 bankruptcy protection on May 15, listing more than $1 billion in
liabilities. 

Penney’s future is still being determined, as it looks to emerge as a smaller
company. It has already announced more than 150 store closures, along with 1,000
layoffs. The company is looking to sell itself in order to avoid liquidation.
When Penney filed for bankruptcy, it still was operating roughly 850 stores. 


GNC HOLDINGS

A customer at a GNC Holdings store in New York.
Jin Lee | Bloomberg | Getty Images

The health chain GNC Holdings filed for bankruptcy on June 23, listing
liabilities of more than $1 billion. 

At the time, it said it planned to shut as many as 1,200 of its 5,200 U.S.
stores, as it searched for a buyer. The company is hoping to either sell itself
or emerge from bankruptcy later this year. In its bankruptcy filing, GNC said
the pandemic only accelerated the “financial pressure for the past several
years.” 


LUCKY BRAND

A pedestrian walks by a Lucky Brand retail store on July 06, 2020 in Corte
Madera, California. Los Angeles based Lucky Brand Dungarees announced that it
has filed for Chapter 11 bankruptcy as the company is millions of dollars in
debt. The retailer will close 13 of its 200 retail stores.
Justin Sullivan | Getty Images

The denim maker Lucky Brand filed for bankruptcy on July 3, listing liabilities
of between $100 million and $500 million. 

With more than 200 stores in shopping malls across the country, the company has
so far said it plans to close 13 locations permanently, but more could be on the
way. A venture known as Sparc Group, which is comprised of mall owner Simon
Property Group and the licensing firm Authentic Brands Group, has been named the
stalking horse bidder, offering $140.1 million in cash and $51.5 million in
credit to buy the company’s assets. The deal is still subject to court
approval. 


SUR LA TABLE

A pedestrian walks by a Sur La Table store on July 10, 2020 in San Francisco,
California.
Justin Sullivan | Getty Images

The kitchen accessories retailer Sur la Table filed for Chapter 11 bankruptcy on
July 8, listing liabilities of between $50 million and $100 million. 

At the time of the filing, the company said it had already started liquidating
51 of its 121 U.S. stores. It was hurt especially by not being able to hold its
in-person cooking classes, which it is most well known for, during the
pandemic. 


BROOKS BROTHERS 

A Brooks Brothers store sign seen in London.
Adam Jeffery | CNBC

The men’s apparel maker Brooks Brothers filed for bankruptcy on July 8, listing
liabilities of between $500 million and $1 billion. 

A stalking horse bid by Sparc (Simon Property Group and Authentic Brands Group)
for $305 million is looking to salvage at least 125 stores. WHP Global, a rival
to ABG, is also preparing a bid for Brooks Brothers, the company told
CNBC. Simon, which is the biggest U.S. mall owner by the number it operates, had
already teamed up with ABG to supply a zero interest, $80 million loan to carry
Brooks Brothers through its restructuring, as the retailer searched for a buyer.
The company has several court hearings this month to discuss possible offers. 


RTW RETAILWINDS 

A pedestrian wearing a protective mask walks near a temporarily closed New York
& Co. store in Silver Spring, Maryland, U.S., on Friday, June 5, 2020.
Andrew Harrer | Bloomberg | Getty Images

New York & Co. parent RTW Retailwinds filed for bankruptcy on July 13, listing
liabilities of between $100 million and $500 million, with 378 retail and outlet
stores. 

The retailer said it plans to permanently close most, if not all, of its
locations. It is also still evaluating potentially selling its e-commerce
operations and related intellectual property in bankruptcy proceedings. 


ASCENA RETAIL GROUP

A Lane Bryant store in New York. The brand is part of Ascena Retail Group.
Getty Images

The parent company of Ann Taylor and Loft, Ascena Retail Group, filed for
Chapter 11 bankruptcy protection on July 23, listing more than $1 billion in
liabilities. It had 2,800 stores across the U.S., Canada and Puerto Rico, as of
the filing. 

Moving forward and hoping to get back to profitability, it said it plans to
permanently close a “significant” number of Justice stores, along with certain
Ann Taylor, Loft, Lane Bryant and Lou & Grey stores during its restructuring. It
is closing all of its plus-size Catherines stores. A final number of store
closings will be determined based on “the ability of Ascena and its landlords to
reach agreement on sustainable lease structures,” it said. 


LE TOTE

Pedestrians walk past a shuttered Lord and Taylor department store on May 12,
2020 in Garden City, New York.
Bruce Bennett | Getty Images

The fashion rental start-up and owner of department store Lord & Taylor filed
for bankruptcy on Sunday. It listed that it has between $100 million and $500
million in estimated liabilities.

Le Tote looked to move beyond its core business, a subscription service for
women’s clothing that’s similar to Rent the Runway, with the acquisition of Lord
& Taylor last year. But that bold move became even more challenging as the
coronavirus pandemic shut stores and weakened the demand for apparel for work
and special occasions.  

Before the acqusition by Le Tote, Lord & Taylor was owned by Hudson’s Bay Co. It
began as a dry goods store in 1826, and operated about three dozen stores across
the country. Its iconic building on New York’s Fifth Avenue closed last year
after more than a century.

On its website, Lord & Taylor said that it’s looking for a new owner, but will
continue to sell merchandise online and in stores.


TAILORED BRANDS

A sign hangs over a Men’s Wearhouse store on July 21, 2020 in Chicago, Illinois.
Scott Olson | Getty Images

Tailored Brands, the owner of well-known clothing brands like Men’s Wearhouse
and Jos. A. Bank, saw demand for men’s suits vanish as workers stayed at home
and special events were canceled during the pandemic. The company, which filed
for bankruptcy Sunday, also owns K&G Fashion Superstore and Moores Clothing for
Men.

In recent weeks, the retailer skipped a $6.1 million payment to bondholders and
announced layoffs as it tried to stay afloat. In late July, it said it would cut
about 20% of its corporate workforce by the end of its fiscal second quarter and
close up to 500 stores. It did not disclose the timetable for closures or the
locations.

Tailored Brands had 1,450 stores in the U.S., as of Feb. 1. In a release, it
said it will reduce the company’s funded debt by at least $630 million through
restructuring. Jack Calandra, CFO of Tailored Brands, left the company on July
31.


READ MORE: THESE RESTAURANT CHAINS FILED FOR BANKRUPTCY DURING THE PANDEMIC 

— CNBC’s Nate Rattner contributed to this data visualization. 

VIDEO3:0703:07
Bankruptcies and layoffs are ‘inevitable’ as stimulus measures fade over time:
DBS
Squawk Box Asia


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