Major Companies That Are Surprisingly About to Go Out of Business
With the monster growth of e-commerce in the last decade, the United States has become oversaturated with retail options. Some surprising retail bankruptcies have already occurred in the last two years, and even more companies are expected to go belly up in 2020.
With retail liquidations at an all-time high, you might be surprised to learn which of your favorite retailers plan to close up shop next. Many of the businesses on this list may seem to be doing fine on the surface, but bankruptcy filings and closing procedures are well underway behind the scenes. Here’s the list of retailers you may have to say goodbye to soon.
Due to falling sales, J.Crew plans to close some of its retail stores. This favorite of former First Lady Michelle Obama has already closed its bridal store. The retailer has also parted ways with its creative director, Jenna Lyons, and its chief executive officer, Millard Drexler. Drexler believed the company’s lackluster sales were due to the company raising its prices at a time when consumers were becoming thriftier.
Sears has been struggling for at least a decade. As sales continued to decline, the company cut costs, sold assets, closed stores and laid off hundreds of employees. Despite these efforts, the retail giant was not able to avoid bankruptcy. In October of 2018, Sears Holdings filed for Chapter 11 bankruptcy and closed 142 retail stores.
99 Cents Only
Discount goods retailer 99 Cents Only has been under a lot of financial stress due to strong competition from companies like Dollar Tree, Dollar General and Walmart. The company recently reported a loss of $271.1 million in 2017, with $33.6 million in losses during the second quarter alone.
Despite top-line revenue of roughly $2.5 billion for the year, widely recognized supplement supplier GNC lost 3.4% of its revenue and has $1.3 billion in debt. GNC’s chief executive officer said the company is doing well in e-commerce sales as well as in China.
Fred’s Pharmacy has been a pharmacy staple for 70 years. The company recently reported that top-line sales fell 4.3% for a net loss of $139.3 million. Fred’s previously had 600 locations and planned to operate 1,000, but those plans fell through when Walgreens backed out of a joint deal with Rite Aid that would have divided acquired Rite Aid stores between the two.
Destination Maternity is a maternity apparel giant with more than 1,000 stores. Last year, the company’s sales fell by more than 7%. The company’s CEO left in 2018, and the company started working with its second interim CEO to turn things around. To help with those efforts, Destination Maternity hired Berkeley Research Group.
Ascena is the umbrella company for once popular mall retailers Dress Barn, Ann Taylor, LOFT and Lou & Grey. Even after the company brought in a new chief executive for Dress Barn, things have not improved for the retail chain. In an attempt to save the brand, Dress Barn will close 25% of its doors by the end of 2019.
Stein Mart has a spark of hope after years of recent struggles. The discount department store based in Jacksonville has seen its sales start to stabilize, with digital sales growing by 47%. The company still reported net losses of $23.4 million last year, but the loss was 10% less than the previous year, so the future isn’t quite as bleak.
Although things are still looking grim for the department store chain, JCPenney has still managed to keep its head above water, unlike former chief competitor Sears, which laid off 1,000 employees and sold its distribution center in 2018. In contrast, JCPenney has been hard at work trying to turn things around.
With sales falling 7% to $10.2 billion in 2017, office supply retailer Office Depot is no stranger to hard times in recent years. Chief Executive Officer Gerry Smith announced that Office Depot would shift to providing a line of services in addition to retail sales in an effort to increase the company’s top line.
The Vitamin Shoppe
This nutritional supplement retailer has had a similar struggle as GNC in recent years. The company hopes to solve its problem of declining sales and lower foot traffic by focusing more efforts on e-commerce and subscription services. Despite the company’s efforts, sales fell 8.5% to around $1.2 billion in 2017.
Discount, fast-fashion retailer Forever 21 filed for bankruptcy on September 29, 2019. After filing for Chapter 11 protection, Linda Chang, the company’s Executive Vice President, announced that Forever 21 will close 350 stores around the world and cease operations completely in 40 countries.
Neiman Marcus saw sales drop 5% to $4.7 billion in 2017. The luxury clothing retailer tried a few strategies to turn things around, but the company’s efforts haven’t improved the outlook. Strategies included eliminating 200 jobs and developing a "Digital First" customer engagement plan to boost sales.
Bebe has been struggling since the company’s founders experienced marital problems. The company’s founder, Manny Mashouf, started Bebe in 1979, and his ex-wife, Neda Mashouf, served as creative director. In 2007, Neda divorced Mashouf and left the company. Declining mall sales and other retail challenges also played a role in falling traffic and sales at Bebe.
Pier 1 Imports
Pier 1 has had a tough time in recent years. In 2018, the home goods retailer tried to curb falling sales by enforcing a strategy that focuses on marketing, sourcing, merchandising, e-commerce and supply chain. Net sales for Pier 1 fell by 9.2% in 2018 to $371.9 million.
Lands’ End offers clothing, luggage and home furnishings, but it seems to be having trouble resonating with consumers. The company’s former association with Sears may have been a potential cause, but the company branched off in 2013. The company has enjoyed strong catalog sales, but it made some critical errors in recent years.
Music supplier Guitar Center has had about a year to refinance the company’s $900 million debt. Although the company has been in business for more than 50 years, its continued existence is threatened by declining electric guitar sales. From 2005 to 2016, the company saw electric guitar sales drop 36%.
Southeastern Grocers, the owner of popular Winn-Dixie grocery stores, recently filed for Chapter 11 bankruptcy protection in an attempt to restructure its debt. The grocery company closed nearly 100 stores and lowered its debt by $600 million. Additionally, it hopes to turn things around by remodeling and rebranding stores that are still open.
Shoe retailer Nine West is saddled with $1.5 billion in debt, although attempts are currently being made to restructure it. Part of the restructuring includes selling portions of the company and filing for Chapter 11 bankruptcy protection. In an effort to save the company, Nine West sold the Easy Spirit brand and closed all but 25 of its retail stores.
Kohl’s Corporation recently decided to close four stores in Los Angeles, Kansas and New York. The company also announced it would consolidate three of its major operation centers into two locations. One major trend the department store noticed was that its lowest-performing locations were the stores located inside or near malls.
Bon-Ton has been in business for more than 100 years, an impressive feat for any retail business. Carson’s, Boston Store and Boscov’s are also part of the Bon-Ton brand of companies. In 2018, Bon-Ton filed for bankruptcy, and the company was sold and liquidated.
David’s Bridal has been a staple in the bridal industry for years, but current trends have brides opting for more casual, less expensive weddings. As a result, stores like David’s Bridal have felt the financial pinch. In 2019, the company has a $520 million loan due, followed by another $270 million due in 2020 in unsecured notes.
Tops Friendly Markets
This East Coast grocery chain has had its share of hard times in recent years. Grocery consumer habits are changing, and Tops has failed to keep up. Modern consumers are gravitating to smaller, specialty grocers and non-traditional food retailers in increasing numbers.
USA Today listed Cole Haan as one of the companies most at risk in 2018. That’s certainly not the way you want your company to make headlines in USA Today. In terms of shoes, the luxury brand is trying to refocus its branding away from dress shoes to sneakers. As consumer preferences have shifted, Cole Haan has struggled to keep up.
Women’s apparel company Charlotte Russe rang in 2019 by filing for bankruptcy protection. The company planned to close 94 of its retail stores in February 2019 when it originally filed for bankruptcy. Since that time, it has been announced that Charlotte Russe will now close all 500 retail stores in the United States.
The accessory store Claire’s is a staple in many childhood memories. This mall standard was where millions of young people would flock to get their ears pierced and buy colorful, inexpensive jewelry and accessories. Claire's decline is likely due to dwindling mall traffic and oversaturation.
FullBeauty Brands Holdings Corp
FullBeauty is a retailer for plus-size women and men. It owns various other brands, such as Woman Within, Jessica London, Ellos, KingSize, Roaman’s and Brylane Home, in addition to its e-commerce sites. E-commerce giant Amazon has been blamed for the company’s financial problems and declining sales.
In 2017, Bellevue-based outdoor company Eddie Bauer faced some major problems. Golden State Capital, the company’s owners, considered a sale in order to pay down its debts. This is one of the many strategies Golden State Capital has tried to revive Eddie Bauer. S&P Global also downgraded Eddie Bauer’s credit rating in 2017.
Bluestem Brands is a major retailer with 13 e-commerce sites in its portfolio. The company’s brands include Appleseed’s, Draper’s & Damon’s, Fingerhut, Blair and Gettington. Due to decreasing sales, Bluestem Brands has been on the chopping block in recent years.
With more than 1,500 stores in the United States, Puerto Rico and Canada, pet goods retailer PetSmart is currently undergoing a restructure. In June of 2018, advisors for the company decided to tackle the $8 billion debt problem it has been facing. The company won’t see debt maturities until 2022; however, PetSmart needs to solve the root of the problem — mainly declining sales — sooner rather than later.