The 10 biggest retail bankruptcies of 2020

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 business. Lockdown orders put in place in March to sluggish the unfold of the virus was extended retailer closures for a lot of companies that didn't promote important objects like groceries. Retailers that began 2020 already in a troublesome spot had been hit more durable. Liquidity was strained and gross sales went right into a freefall.

"The magnitude of bankruptcies has been larger this year compared to previous years," mentioned David Berliner, chief of BDO's enterprise restructuring and turnaround observe. "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 means of August listed greater than $100 million in belongings, 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 Tailored Brands have now joined the ranks of some of the all-time biggest retail bankruptcies on file — together with Sears, Toys R Us and Circuit City.

The pandemic accelerated a quantity of business tendencies, 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 residence and never getting dressed up turned the norm. And as a substitute, shoppers seemed to purchase issues to entertain themselves at residence, like bikes and puzzles. This has largely benefitted corporations comparable to Amazon, Walmart and Target, which have sturdy on-line companies and promote somewhat bit of all the pieces.

After the vacation season wraps, extra turmoil is predicted within the new 12 months. The holidays are all the time a "make or break" time for retailers, however analysts say that's 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," mentioned 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 record was compiled utilizing knowledge from court docket filings, S&P Global Market Intelligence and BDO.

J.C. Penney

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

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 stoop, 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 staff as of February, has closed greater than 150 areas since its chapter submitting. Another 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 Management. After months of negotiations within the courtroom, the 2 mall house owners acquired Penney in early December, holding greater than 60,000 jobs intact. But Penney's future relies on consumers heading again to malls for attire, sneakers and purses. And this 12 months has confirmed that can be a hard-fought battle.

Neiman Marcus

People stroll exterior of Neiman Marcus and The Shops on the Hudson Yards as the town continues Phase 4 of re-opening following restrictions imposed to sluggish the unfold of coronavirus on July 31, 2020 in New York City.Noam Galai | Getty Images

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 mentioned within the fall.

As half of its restructuring, Neiman has closed a handful of outlets, together with an enormous retailer at Hudson Yards in New York that had hardly been open for a 12 months. Over the following 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 experience the sturdy rebound of the luxurious market, as high-income shoppers splurge extra on themselves, with journey and different social actions are on maintain.

Guitar Center

ans pay tribute to the late rock legend Eddie Van Halen on the web site of his guitar and handprints on the Hollywood Rock Walk after the announcement of his loss of life on October 06, 2020 in Hollywood, California. (Photo by AaronP/Bauer-Griffin/GC Images)Aaron P. | GC Images | Getty Images

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 Fifties promoting residence organs, and grew to grow to be a frontrunner within the music class. But momentary retailer closures introduced on by the pandemic harm the corporate, as consumers turned to the web to purchase devices and sheet music. The retailer, which employed roughly 13,000 individuals, 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 court docket 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 mentioned in a press release. (*10*)

Tailored Brands

A Jos. A. Bank retailer windowSource: Getty Images

Assets: More than $1 billion
Liabilities:
More than $1 billion
Stores at time of submitting:
1,400

Tailored Brands, the proprietor of Men's Wearhouse and Jos. A. Bank, filed for Chapter 11 in August, anticipating to cut back its debt and strengthen its funds, which had been eroded by the pandemic.

Tailored Brands' 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. About a month earlier than its chapter submitting, Tailored Brands 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. Looking to the longer term, President and CEO Dinesh Lathi mentioned the corporate is planning to regulate its merchandise and launch new model partnerships.

Ascena Retail

Shopper enters a Ann Taylor LOFT clothes retailer situated on Madison Avenue in New York City.Adam Rountree | Bloomberg | Getty Images

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

The mother or father 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 ladies'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 ladies steered towards fast-fashion retailers comparable to H&M and Zara, off-price chains comparable 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 court docket 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 in search of snug and informal clothes.

GNC

Pedestrians stroll by a GNC retailer in New York.Scott Mlyn | CNBC

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 rely and shift investments to digital, GNC filed for Chapter 11 in June. GNC mentioned the pandemic solely exacerbated the monetary strain of latest years. While 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 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 mentioned in a press release.

J.Crew Group

A ladies holding a bag poses for {a photograph} at J. Crew Group Inc.'s new ladies's retailer contained in the International Finance Centre (IFC) mall in Hong Kong, China, on Thursday, May 22, 2014.Brent Lewin | Bloomberg | Getty Images

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 underneath a heavy debt load and gross sales challenges, affected by criticism that it fell out of contact with its once-loyal clients. 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 areas at manufacturing facility 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, mentioned in a press release. Singer was changed by Libby Wadle, a longtime J.Crew exec, in November.

Brooks Brothers

Brooks Brothers, one of the oldest attire retailers within the United States, filed for chapter safety on July 8, 2020 because the coronavirus pandemic continues to impression companies.Wang Ying | Xinhua News Agency | Getty Images

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 over time turned too expensive, and the pandemic compelled 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 not less than 125 areas open for enterprise.

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

Stein Mart

A Stein Mart retailer in King of Prussia, PA.Google Earth

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 fighting an overhang of debt pre-Covid, however its gross sales dried up throughout momentary 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 predicted 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 mentioned in a latest interview. "We want to be kind of an online version."

Pier 1 Imports

A "Going Out of Business" signal hangs exterior a Pier 1 Imports retailer on August 9, 2020 in Las Vegas, Nevada.Ethan Miller | Getty Images

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, in the end pushing Pier 1 into a complete liquidation.

Going-out-of-business gross sales at its lots of of shops had been briefly stalled till the spring and summer time, 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 belongings 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 mentioned.

The 2020 vacation season may very well be a make or break it for a lot of retailersPower Lunch

based mostly on web site supplies www.cnbc.com

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