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The 10 biggest retail bankruptcies of 2020


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More than three dozen retailers, together with the nation’s oldest division retailer chain, filed for chapter this 12 months, marking an 11-year excessive.

Pre-pandemic, a number of of these retailers had been already teetering on the brink of survival. But the Covid well being disaster pummeled the trade. Lockdown orders put in place in March to gradual the unfold of the virus was extended retailer closures for a lot of companies that did not promote important objects like groceries. Retailers that began 2020 already in a troublesome spot had been hit tougher. Liquidity was strained and gross sales went right into a freefall.

“The magnitude of bankruptcies has been larger this year compared to previous years,” stated David Berliner, chief of BDO’s enterprise restructuring and turnaround follow. “You’re noticing national brands and other prominent franchises, that had hundreds of stores, now being liquidated or going through a restructure to salvage what they can.”

About 60% of the retailers that had filed for chapter in 2020 by August listed greater than $100 million in property, in contrast with 50% of filings throughout the identical interval in 2019 and 36% in 2018, Berliner stated.

Neiman Marcus, J.C. Penney, Ascena Retail Group and Tailored Brands have now joined the ranks of some of the all-time biggest retail bankruptcies on report — together with Sears, Toys R Us and Circuit City.

The pandemic accelerated a quantity of trade developments, together with rampant development in digital commerce. Consumers habits shifted, and the objects they needed to purchase modified abruptly. Sales of attire fell sharply, as working from house and never getting dressed up turned the norm. And as an alternative, shoppers seemed to purchase issues to entertain themselves at house, like bikes and puzzles. This has largely benefitted firms akin to Amazon, Walmart and Target, which have robust on-line companies and promote just a little bit of all the pieces.

After the vacation season wraps, extra turmoil is anticipated within the new 12 months. The holidays are all the time a “make or break” time for retailers, however analysts say that is very true in 2020.

“The silver lining of all this, however, is that in an accelerated understanding of great weakness comes the ability to look at 2021 and our new normal when modeling for the future,” stated Scott Stuart, CEO of the Turnaround Management Association.

“I believe the retail sector is in a time of soul-searching and reckoning, understanding that what was, is likely gone forever,” he added.

Below are the 10 biggest retail bankruptcies of 2020, listed by asset sizes and liabilities on the time of their filings. The listing was compiled utilizing knowledge from courtroom filings, S&P Global Market Intelligence and BDO.

J.C. Penney

Assets: More than $5 billion
Liabilities:
More than $10 billion
Stores at time of submitting:
846

Following greater than a century in enterprise and a years-long gross sales hunch, J.C. Penney filed for Chapter 11 chapter safety in mid-May. Weighed down by debt, it was struggling lengthy earlier than the pandemic, however the Covid disaster exacerbated its issues.

Penney, which employed roughly 90,000 full- and part-time employees as of February, has closed greater than 150 areas since its chapter submitting. Another 15 shops will shut by March, it stated earlier this month.

The division retailer chain has been given one other probability with new house owners: Simon Property Group and Brookfield Asset Management. After months of negotiations within the courtroom, the 2 mall house owners acquired Penney in early December, conserving greater than 60,000 jobs intact. But Penney’s future depends on customers heading again to malls for clothes, footwear and purses. And this 12 months has confirmed that might be a hard-fought battle.

Neiman Marcus

Assets: More than $5 billion
Liabilities:
More than $5 billion
Stores at time of submitting:
67

The upscale division retailer chain filed for Chapter 11 in early May, marking one of the highest-profile retail collapses through the pandemic.

After eliminating billions in debt, Neiman introduced on a brand new board of administrators that features former LVMH North America Chair Pauline Brown and former eBay Chief Strategy Officer Kris Miller. Geoffroy van Raemdonck has remained as CEO.

“While the unprecedented business disruption caused by Covid-19 has presented many challenges, it has also given us the opportunity to reimagine our platform and improve our business,” van Raemdonck stated within the fall.

As half of its restructuring, Neiman has closed a handful of retailers, together with a large retailer at Hudson Yards in New York that had hardly been open for a 12 months. Over the subsequent three years, the corporate has earmarked greater than $160 million to spend money on its shops, together with renovating its Dallas flagship, the CEO stated in a current interview.

Neiman hopes to trip the robust rebound of the posh market, as high-income shoppers splurge extra on themselves, with journey and different social actions are on maintain.

Guitar Center

Assets: More than $1 billion
Liabilities:
More than $1 billion
Stores at time of submitting:
Roughly 300

Guitar Center began its enterprise in Hollywood within the 1950s promoting house organs, and grew to grow to be a pacesetter within the music class. But short-term retailer closures introduced on by the pandemic harm the corporate, as customers turned to the web to purchase devices and sheet music. The retailer, which employed roughly 13,000 folks, filed for Chapter 11 in late November.

Its objective to rebound within the new 12 months is taking form. In early December, Guitar Center’s restructuring plans had been authorized by a courtroom decide, and it expects to emerge from chapter by Dec. 31. The retailer and stakeholders reached a restructuring settlement that slashes its money owed by virtually $800 million and raises as a lot as $165 million in new fairness.

“With our strengthened financial position, we will continue to reinvest and grow our business,” CEO Ron Japinga stated in a press release. “We are nearing the end of a successful holiday season and I am excited about our bright future.”

Tailored Brands

Ascena Retail

Assets: More than $1 billion
Liabilities:
More than $1 billion
Stores at time of submitting:
2,800

The dad or mum of Ann Taylor and Loft, Ascena Retail Group, filed for Chapter 11 in July. Founded as Dressbarn in 1962, the corporate grew to grow to be one of the nation’s largest sellers of girls’s clothes. But its gross sales dwindled from almost $7 billion in 2016 to $5.5 billion in fiscal 2019, annual filings present.

Ascena more and more struggled to develop its enterprise as extra girls steered towards fast-fashion retailers akin to H&M and Zara, off-price chains akin to TJ Maxx and Ross Stores, and even Target, for clothes.

In 2019, Ascena introduced it was winding down its Dressbarn enterprise and it offered its Maurices plus-size banner. Since submitting for Chapter 11, it has offered off its Justice youngsters’s clothes division and shut all of its Catherines shops. Earlier this month, a courtroom decide authorized Ascena’s sale of its Ann Taylor, Loft, Lane Bryant and Lou & Grey manufacturers to the private-equity agency Sycamore Partners for $540 million. 

Sycamore has vowed to maintain the bulk of Ascena’s remaining shops open for enterprise. But, like Tailored Brands, it might want to work to win over a era of youthful shoppers looking for comfy and informal clothes.

GNC

Assets: More than $1 billion
Liabilities:
More than $1 billion
Stores at time of submitting:
2,633

Despite earlier makes an attempt to chop its retailer depend and shift investments to digital, GNC filed for Chapter 11 in June. GNC stated the pandemic solely exacerbated the monetary strain of current years. While in chapter, GNC stated it hoped to hurry up the closure of 800 to 1,200 shops, whereas it looked for a purchaser.

In September, a chapter courtroom decide authorized the sale of the Pittsburgh-based, vitamin and well being dietary supplements maker to China-based Harbin Pharmaceutical Group for $770 million.

“Through the restructuring and court-approved sale to Harbin, GNC has optimized its store footprint, improved its financial standing and is now better positioned to meet the strong consumer demand for health and wellness products under Harbin’s leadership,” the corporate stated in a press release.

J.Crew Group

Assets: More than $1 billion
Liabilities:
More than $1 billion
Stores at time of submitting:
491

The preppy attire firm J.Crew filed for Chapter 11 in early May, marking the primary main retail chapter of the pandemic.

It had already been struggling below a heavy debt load and gross sales challenges, affected by criticism that it fell out of contact with its once-loyal prospects. J.Crew had additionally as soon as hoped to spin off its Madewell model in an IPO that might have helped pay down its debt load however confronted pushback from collectors. 

In September, the corporate emerged from chapter, with its portfolio of shops about unchanged. When it filed, it had 181 J.Crew shops, 140 Madewell retailers and 170 areas at manufacturing unit retailers.

The restructuring deal lower its debt and shifted possession of the retailer to a gaggle of lenders, led by New York hedge fund Anchorage Capital Group.

“Looking forward, our strategy is focused on three core pillars: delivering a focused selection of iconic, timeless products; elevating the brand experience to deepen our relationship with customers; and prioritizing frictionless shopping,” Jan Singer, who was CEO of J.Crew Group on the time, stated in a press release. Singer was changed by Libby Wadle, a longtime J.Crew exec, in November.

Brooks Brothers

Assets: $500 million
Liabilities:
$500 million
Stores at time of submitting:
244

Brooks Brothers, one of the oldest attire chains within the nation, filed for Chapter 11in July. Leases from its actual property growth through the years turned too pricey, and the pandemic pressured it to rethink its retail technique as many shoppers shifted into sweat pants.

In chapter, the corporate sought a brand new proprietor whereas it started shutting dozens of shops, attributing the choice to the well being disaster.

In September, mall proprietor Simon and the attire licensing agency Authentic Brands Group, which additionally owns Forever 21 and Aeropostale, accomplished their acquisition of Brooks Brothers. They paid $325 million for the retailer and promised to maintain at the least 125 areas open for enterprise.

“We see a great opportunity to strategically expand this powerhouse brand across the globe,” ABG CEO Jamie Salter stated.

Stein Mart

Assets: $500 million to $1 billion
Liabilities:
$500 million to $1 billion
Stores at time of submitting:
281

The low cost attire and equipment chain Stein Mart sought Chapter 11 safety in August, and went on to liquidate all 281 shops. Stein Mart was already combating an overhang of debt pre-Covid, however its gross sales dried up throughout short-term retailer closures within the spring.

Earlier this month, the Miami-based funding agency Retail Ecommerce Ventures acquired Stein Mart’s mental property in a courtroom public sale for $6.02 million. SteinMart.com is anticipated to relaunch in early 2021.

“Any time you see the big, 800-pound gorilla competitor, like TJ Maxx, you know they’re doing something right,” REV co-founder Tai Lopez stated in a current interview. “We want to be kind of an online version.”

Pier 1 Imports

Assets: More than $400 million
Liabilities:
More than $250 million
Stores at time of submitting:
991

The home-goods chain Pier 1 Imports filed for Chapter 11 in mid-February, after almost 60 years in enterprise. Its plans to discover a purchaser had been unsuccessful, because the pandemic worsened in March, finally pushing Pier 1 into a complete liquidation.

Going-out-of-business gross sales at its a whole bunch of shops had been quickly stalled till the spring and summer season, when native lockdowns had been lifted.

But some nonetheless noticed worth within the Pier 1 model identify. REV, Stein Mart’s new proprietor, acquired the rights to Pier 1′s trademark, mental property and different property for $31 million in July. It relaunched Pier1.com within the fall. REV’s Lopez has instructed CNBC he has no plans to reopen shops right now. REV additionally owns Modell’s Sporting Goods, Dressbarn and Linens ‘n Things.

“I’ve always been a big fan of Warren Buffett, and his strategy of just acquiring things that are already there versus building from scratch. And in 2019, we started seeing the writing on the wall with the so-called retail apocalypse,” Lopez stated.



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