The 10 largest retail bankruptcies of 2020

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

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

“The magnitude of bankruptcies has been bigger this yr in comparison with earlier years,” mentioned David Berliner, chief of BDO’s enterprise restructuring and turnaround apply. “You are noticing nationwide manufacturers and different distinguished franchises, that had a whole bunch of shops, now being liquidated or going by way of a restructure to salvage what they’ll.”

About 60% of the retailers that had filed for chapter in 2020 by way of 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 mentioned.

Neiman Marcus, J.C. Penney, Ascena Retail Group and Tailor-made Manufacturers have now joined the ranks of a few of the all-time largest retail bankruptcies on document — together with Sears, Toys R Us and Circuit Metropolis.

The pandemic accelerated a lot of trade developments, together with rampant progress in digital commerce. Shoppers habits shifted, and the gadgets they needed to purchase modified abruptly. Gross sales of attire fell sharply, as working from residence and never getting dressed up turned the norm. And as an alternative, customers seemed to purchase issues to entertain themselves at residence, like bikes and puzzles. This has largely benefitted firms corresponding to Amazon, Walmart and Goal, which have sturdy on-line companies and promote a bit of little bit of every thing.

After the vacation season wraps, extra turmoil is anticipated within the new yr. The vacations 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, nevertheless, is that in an accelerated understanding of nice weak point comes the flexibility to have a look at 2021 and our new regular when modeling for the longer term,” mentioned Scott Stuart, CEO of the Turnaround Administration Affiliation.

“I imagine the retail sector is in a time of soul-searching and reckoning, understanding that what was, is probably going gone ceaselessly,” he added.

Under are the 10 largest retail bankruptcies of 2020, listed by asset sizes and liabilities on the time of their filings. The record was compiled utilizing information from court docket filings, S&P World Market Intelligence and BDO.

Property: Greater than $5 billion
Liabilities: Greater than $10 billion
Shops at time of submitting: 846

Following greater than a century in enterprise and a years-long gross sales stoop, J.C. Penney filed for Chapter 11 chapter safety in mid-Could. 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 places since its chapter submitting. One other 15 shops will shut by March, it mentioned earlier this month.

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

Property: Greater than $5 billion
Liabilities: Greater than $5 billion
Shops at time of submitting: 67

The upscale division retailer chain filed for Chapter 11 in early Could, marking one of many 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 Technique Officer Kris Miller. Geoffroy van Raemdonck has remained as CEO.

“Whereas the unprecedented enterprise disruption brought on by Covid-19 has offered many challenges, it has additionally given us the chance to reimagine our platform and enhance our enterprise,” van Raemdonck mentioned within the fall.

As a part 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 yr. Over the subsequent three years, the corporate has earmarked greater than $160 million to put money into its shops, together with renovating its Dallas flagship, the CEO mentioned in a latest interview.

Neiman hopes to journey the sturdy rebound of the luxurious market, as high-income customers splurge extra on themselves, with journey and different social actions are on maintain.

Property: Greater than $1 billion
Liabilities: Greater than $1 billion
Shops at time of submitting: Roughly 300

Guitar Middle began its enterprise in Hollywood within the 1950s promoting residence organs, and grew to turn out to be a frontrunner within the music class. However non permanent 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 yr is taking form. In early December, Guitar Middle’s restructuring plans had been permitted by a court docket choose, 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 monetary place, we are going to proceed to reinvest and develop our enterprise,” CEO Ron Japinga mentioned in an announcement. “We’re nearing the top of a profitable vacation season and I’m enthusiastic about our shiny future.”

Property: Greater than $1 billion
Liabilities: Greater than $1 billion
Shops at time of submitting: 1,400

Tailor-made Manufacturers, the proprietor of Males’s Wearhouse and Jos. A. Financial institution, filed for Chapter 11 in August, anticipating to cut back its debt and strengthen its funds, which had been eroded by the pandemic.

Tailor-made Manufacturers’ submitting was amongst a string of attire retail casualties blamed on the work-from-home casualization of company America and fewer males shopping for fits and ties. A few month earlier than its chapter submitting, Tailor-made Manufacturers introduced plans to shut as many as 500 shops “over time.” It additionally slashed its company workforce by 20%.

In early December, the corporate introduced it had efficiently emerged from Chapter 11 and eradicated $686 million of present debt. Trying to the longer term, President and CEO Dinesh Lathi mentioned the corporate is planning to regulate its merchandise and launch new model partnerships.

Property: Greater than $1 billion
Liabilities: Greater than $1 billion
Shops at time of submitting: 2,800

The guardian of Ann Taylor and Loft, Ascena Retail Group, filed for Chapter 11 in July. Based as Dressbarn in 1962, the corporate grew to turn out to be one of many nation’s largest sellers of ladies’s clothes. However its gross sales dwindled from practically $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 ladies steered towards fast-fashion retailers corresponding to H&M and Zara, off-price chains corresponding to TJ Maxx and Ross Shops, and even Goal, 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 kids’s clothes division and shut all of its Catherines shops. Earlier this month, a court docket choose permitted Ascena’s sale of its Ann Taylor, Loft, Lane Bryant and Lou & Gray manufacturers to the private-equity agency Sycamore Companions for $540 million. 

Sycamore has vowed to maintain the vast majority of Ascena’s remaining shops open for enterprise. However, like Tailor-made Manufacturers, it might want to work to win over a technology of youthful customers looking for snug and informal clothes.

Property: Greater than $1 billion
Liabilities: Greater than $1 billion
Shops at time of submitting: 2,633

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

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

“Via the restructuring and court-approved sale to Harbin, GNC has optimized its retailer footprint, improved its monetary standing and is now higher positioned to fulfill the sturdy shopper demand for well being and wellness merchandise beneath Harbin’s management,” the corporate mentioned in an announcement.

Property: Greater than $1 billion
Liabilities: Greater than $1 billion
Shops at time of submitting: 491

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

It had already been struggling beneath 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 outlets and 170 places at manufacturing unit shops.

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.

“Wanting ahead, our technique is concentrated on three core pillars: delivering a centered collection of iconic, timeless merchandise; elevating the model expertise to deepen our relationship with prospects; and prioritizing frictionless purchasing,” Jan Singer, who was CEO of J.Crew Group on the time, mentioned in an announcement. Singer was changed by Libby Wadle, a longtime J.Crew exec, in November.

Property: $500 million
Liabilities: $500 million
Shops at time of submitting: 244

Brooks Brothers, one of many 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 customers 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 Genuine Manufacturers Group, which additionally owns Ceaselessly 21 and Aeropostale, accomplished their acquisition of Brooks Brothers. They paid $325 million for the retailer and promised to maintain not less than 125 places open for enterprise.

“We see a terrific alternative to strategically develop this powerhouse model throughout the globe,” ABG CEO Jamie Salter mentioned.

Property: $500 million to $1 billion
Liabilities: $500 million to $1 billion
Shops 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 battling an overhang of debt pre-Covid, however its gross sales dried up throughout non permanent retailer closures within the spring.

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

“Any time you see the massive, 800-pound gorilla competitor, like TJ Maxx, they’re doing one thing proper,” REV co-founder Tai Lopez mentioned in a latest interview. “We need to be type of a web-based model.”

Property: Greater than $400 million
Liabilities: Greater than $250 million
Shops at time of submitting: 991

The house-goods chain Pier 1 Imports filed for Chapter 11 in mid-February, after practically 60 years in enterprise. Its plans to discover a purchaser had been unsuccessful, because the pandemic worsened in March, in the end 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 time, when native lockdowns had been lifted.

However some nonetheless noticed worth within the Pier 1 model title. 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 informed CNBC he has no plans to reopen shops right now. REV additionally owns Modell’s Sporting Items, Dressbarn and Linens ‘n Issues.

“I’ve all the time been a giant fan of Warren Buffett, and his technique of simply buying issues which might be already there versus constructing from scratch. And in 2019, we began seeing the writing on the wall with the so-called retail apocalypse,” Lopez mentioned.