Major Retailers Heading for Bankruptcy A Growing Trend | Half Price Lawyers

Major Retailers Heading for Bankruptcy A Growing Trend

Earlier this month, Fred’s announced its decision to file for Chapter 11 bankruptcy and the shutting down of all its retail stores. The trend continues in an increasingly digital retail world: retailer after retailer can’t adapt to the growing world of e-commerce and deplete their resources as they struggle to stay afloat. Eventually, they drown in unpayable debt and throw in the towel. Our Las Vegas bankruptcy lawyers say this trend looks like it’s poised to continue.

J.C. Penny May Be the Next to File for Bankruptcy

J.C. Penny is another long-time American staple that was once the heart of the retail landscape. Who over 30 doesn’t remember the good ‘ole J.C. Penny catalogs arriving just before the holidays? Sadly, as more and more consumers migrated away from brick-and-mortar malls and shifted their purchasing power to the virtual landscape, J.C. Penny was unable to keep up with the changing market trends. They did not build up a successful online presence or update their stores or offerings in ways that appealed to younger crowds — or even to the older customers’ ever-changing needs.

J.C. Penny has become largely irrelevant as margins fall and comps remain negative. The business does not produce enough cash to allow management to invest back into the business, and there’s over $5 billion in company debt on the balance sheet. Though J.C. Penny hasn’t officially filed for bankruptcy yet; it is likely on the horizon.

More Retailers Headed Toward Almost Certain Bankruptcy

Another big name retailer whose future is grim is Ascena. This female apparel company is the parent company of well-known brands such as Ann Taylor, LOFT, Lane Bryant, and others. Unfortunately for Ascena, those brands don’t appeal to the modern woman as much as they once (if ever) did, and there is too much competition on the market.
As with J.C. Penny, Ascena doesn’t have the financial resources to improve itself; it’s barely staying afloat.

Sage Stores is another department store that finds itself heading for bankruptcy, sooner than later, due to its failure to join the virtual shopping world in a meaningful capacity. As well, Sage Stores hold over $675 million in debt and is not earning enough to pay down that debt.
Sage is not ready to go down without a fight. Executives continue to try to convert its department stores into “off-price” discount stores with the hope of gaining more clients. Still, margins are dropping, and cash flow is negative.

Big 5, Pier 1, Bed Bath & Beyond Not Immune, Inching Closer to Bankruptcy

Big 5 Sporting Goods would not be the first in the sporting goods sector to file for bankruptcy, but it may be the next. Competitors such as Walmart, Amazon, and Target simply make it too difficult for a specialty store like Big 5 to compete.

Perhaps even more surprising than that is Pier 1 Import’s fast-approaching doom. Pier 1 has been struggling for a long time and cannot keep up with competitors such as Wayfair, an e-commerce giant. Further, Pier 1 has almost $1 billion in debt.

The last store on our list is one we assume you are familiar with. Who hasn’t received a 20% Off Discount Coupon from Bed Bath & Beyond? This store, once a “new home” staple, can no longer compete with Amazon, Walmart, and Target. Comps and sales trends are negative, as are margin and profit trends. Not to mention, the amount of debt the store carries is huge.

Watching Traditional Retail Market Crumble

Overall, it appears that the two main reasons retail stores are struggling are 1) an inability to adapt to the growing “online shopping” trend (which will likely remain more than a trend) and 2) an inability to compete with big-box giants like Amazon, Walmart, and Target.
While we may or may not have sympathy for companies like Pier 1, perhaps we could all wish our best of luck to small, boutique, “mom and pop” shops in the difficult market today.