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These Companies Are Facing Bankruptcy This Year

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For some, business is strong. For others, however, they are faced with an uncertain future as retail habits and trends change according to shifting demographics. In 2018, retailers filed for bankruptcy in record numbers – suddenly people stopped going to stores.

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This isn’t the end of these companies. It’s merely a wake-up call for industries to pivot toward new ways of selling their product or service. Here are some of the companies that face bankruptcy this year – is it the end for your favorite stores?


J. Crew

This clothing company is the first choice for former First Lady Michelle Obama. Unfortunately, her influence on the brand didn’t help it – it’s closing more of its stores and reporting plunging sales. Its CEO, Millard Drexler believe the problems started when J. Crew raised its prices.

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It turns out that once upon a time people wanted to spend $70 on jeans – but those days are over. Younger people are more likely to order cheaper options online. Do you like J. Crew?

Sears Holdings

Sears has been in trouble for roughly 10 years, but we would be sad if 2019 was the year it finally met its fate. They’ve tried everything: cutting costs, layoffs, store closures – nothing seems to help it. By October 2018, they’ve closed a massive 142 stores across the USA.

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Chapter 11 bankruptcy has allowed it to temporarily reorganize its assets in order to plan for a brighter future. Do you still shop at Sears, and would you be sad to see it go?

99 Cents Only

The 35-year-old company has been forced to try new tactics after reporting a massive $33.6 million loss in 2017. It sold itself to Ares Management, Canadian Pension Plan, and a private family, who all intend on saving it from extinction.

photo by Edwin Folven

After facing competition from Walmart and Dollar General, it seems that people simply stopped going to 99 Cents Only. Its losses could mean that 99 Cents Only won’t join other companies in 2020 – would you mind?

GNC

$1.3 billion is a large debt to pay off, but GNC seems confident in its ability to return the investment. According to its Q2 numbers in 2018, the company is doing fairly well in China and e-commerce, making the pivot as smooth as possible.

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However, its profits are falling and 40% of the company was sold to China. The pharma company will now manufacture and sell products in China, saving GNC even if it declines across the USA.

Fred’s Pharmacy

Last year, the 70-year-old company reported a 4.3% drop in sales, totaling a loss of $139 million. It tried to expand to 1000 stores (from 600), but failed to fill the spaces and pay off the costs.

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Fred’s Pharmacy was ultimately bought by CVS and is surviving due to the larger company’s support. The vintage company was approached by Walgreens and Rite Aid, but plans did not materialize. This next company is facing a whole list of problems…

Destination Maternity

Destination Maternity has more than 1000 stores around the country, but presence isn’t a good indicator of performance. The CEO had to resign after reporting losses of seven percent. The company has been scrambling to rearrange its assets and pivot to online sales, something from which pregnant people would surely benefit.

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Today, it is being assisted by Berkeley Research Group who is helping its e-commerce efforts. The good thing about running a maternity company is that there is always a market!

Ascena Retail

This retailer is the head of companies like LOFT, Ann Taylor, Dress Barn, and Lou & Grey. Unfortunately, things aren’t too strong and it will be shutting 25% of its Dress Barn stores this year.

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According to the financial services company Moody’s, Ascena “is on a path to developing a strong ‘backbone’ of retail capabilities.” Its overall revenue still sits in the billions, but this number has been dropping over the last few years – pointing to a sad future.

Stein Mart

The Jacksonville-based discount department shop has grappled with its business but is seeing some flickers of hope yet! Stein Mart’s sales sustained through a difficult time and digital sales grew by 47% in the third quarter of 2017!

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It announced $23.4 million net loss for the year but said it shortened its loss size to around 10 percent, so don’t expect it to go away any time soon. It recently secured a $50 million term loan, which it expects to pay back.

JC Penney

Even though its performance is stronger than Sears, things still aren’t looking too good for JC Penney. The department store chain saw 1000 employees lose their jobs and sales profits dropping to about $166 million. A significant role in its turnaround is its total debt of $4.2 billion.

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According to RetailDive, JC Penney investors are becoming impatient with the slow pace at which it’s paying the money back. It also had several other changes to its executive structure, including its CEO.

Vitamin Shoppe

Did we fall out of love with vitamins?  Like GNC, Vitamin Shoppe has also fought with its declining sales. But, similar to GNC, it is improving its e-commerce business and has begun offering a subscription program.

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Vitamin Shoppe is hoping to shift things with category expansion, delivery services, events, and more. Despite all this, the company saw a drop of 8.5% – down to $1.2 billion in sales in 2017. Why do you think America stopped taking vitamins, and would you try them again?

Neiman Marcus

The luxurious clothing retailer’s entire sales fell 5% to $4.7 billion in the fiscal year 2017. Neiman Marcus attempted a couple things that RetailDive stated were paying off, but still its interest rates are alarming.

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Some proposed strategies that would cut over 200 jobs, as well as developing a customer engagement plan called “Digital First.” Apparently, companies were approaching Neiman Marcus to buy it, but they have decided against it due to their sales, which is a shame.

Bebe

This fashion retailer’s sales started to suffer after its creative director, Neda Mashouf, left after a nasty divorce in 2007. Her ex-husband, Manny Mashouf, had founded the company in 1979.

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RetailDive also associates declining mall popularity and other retail challenges as badly affecting Bebe – millennials just aren’t shopping now. In 2017, it had a loss of $4.6 million. Its new strategy is to focus entirely on e-commerce sales, which is expected to save them $65 million. Do you think it’ll work out?

Pier 1 imports

According to the research and strategy firm Jeffries, Pier 1 is in for a “heavy investment year” as it approaches its “sourcing, merchandising, pricing, marketing, store ops, e-com, and supply chain.”

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JIM OFFNER / Courier Business Editor

Overall net sales declined in 2018 quarter one by 9.2% year over year, to a total of $371.9 million. To make matters worse, S&P Global analysts then downgraded Pier 1’s credit rating. 60% of its products are Chinese imports, meaning the company has been affected by the ongoing trade war.

Land’s End

Unfortunately, it turns out the retailer’s casual clothing, baggage, and home furnishings aren’t making an impact on consumers anymore. According to CheatSheet Lands’ End’s association with Sears was what caused its original problems.

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Sears branched off in 2013 and the catalog items still saw strong sales at least for a while. Lands’ End’s former CEO Federica Marchionni made some fatal errors, including trying to cater to young people. It was unable to garner a young crowd of brand-loyal millennials and has been struggling since.

Guitar Centre

As of last year, the rock n’ roll store has about a year to pay back a debt of $900 million! Guitar Center has been in the market for more than 50 years but it looks like people are buying fewer and fewer guitars. According to CheatSheet, its electric guitar sales fell 36% from 2005 to 2016. Ouch!

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In an interview with Forbes, its Executive Vice President of merchandising and e-commerce Michael Amkreutz states the company is in transformation, but still going considerably strong.

Southeastern Grocers

It looks as though Winn-Dixie grocery chain isn’t doing well. Its executive, Southeastern Grocers, filed for Chapter 11 bankruptcy to help restructure its debt. It reduced its debt by $600 million and shut nearly 100 stores.

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The company says it’s turned its focus to rebranding and refurbishing stores that are still open, which they hope will reverse its fortune. According to CNBC, the company faces challenges from Walmart, Target, and Amazon – particularly with its purchase of Whole Foods.

Nine West

CheatSheet states this shoe retailer is $1.5 billion in debt and currently in negotiations to redistribute its debt. Bloomberg reports that this covers Chapter 11 bankruptcy and selling off divisions of the company.

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In order to save itself from bankruptcy, Nine West has sold off its Easy Spirit brand and closed all but 25 of its stores. It will pivot from sandals and heels to jewelry and clothing – since young people don’t wear shoes as much, apparently. Would you miss Nine West?

David’s Bridal

Today, brides are opting for more casual, less expensive affairs. Unfortunately, those in the wedding industry (like David’s Bridal) are noticing drops in sales. CheatSheet describes the company as having a $520 million loan facility due in 2019 and $270 million in unsecured notes outstanding in 2020.

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Its new CEO, Scott Key, might do some debt redistribution to help the industry. It couldn’t stop S&P Global from downgrading their credit rating. Thankfully, with divorce now in record numbers, they can rely on more repeat business.

Bon-Ton

This company had been in operation for a massive 100 years! They say all good things come to an end — but must they? Bon-Ton, an e-commerce retailer and department store, filed for bankruptcy in 2018 and was ultimately sold and liquidated.

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It declared in October 2018 that it relaunched its e-commerce site and will open preferred stores in top locations. Apparently, they were popular in small towns but can’t compete with Amazon and shoppers’ preference for online shopping.

Tops Market

Today, more shoppers are interested in non-traditional food retailers, attracted to falling food prices and competition. Because of this, Tops had to file for Chapter 11 bankruptcy. The East Coast grocery chain will have most stores still open (for now) in New York, Vermont, and Pennsylvania.

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The Buffalo News

The Buffalo News reported in July 2018 that the company has been released from the $80 million in yearly interest payments it had to meet in 2017, which is promising. Let’s see how their 2019 goes and whether it avoids
bankruptcy.

Office Depot

The office supply store saw some hard times in 2017, when sales fell 7% to $10.2 billion. It might sound a lot of profit, but the drop was significant enough to announce a shift in its operations.

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CEO Gerry Smith stated Office Depot would be making a transformation from mostly retail sales to also incorporate services to avoid bankruptcy. This includes ‘BizBox’, a subscription program that helps with computer software. It now accounts for 14% of its sales – an impressive bounceback!

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