2017 Retail Bankruptcies Soar To 'Great Recession' Highs

Tyler Durden's picture

As U.S. equity markets continue their march back toward all-time highs, courtesy of the latest BTFD binge trade, at least one 'small' segment of the U.S. economy does not seem to be participating in the rally as 9 brick-and-mortar retailers have already filed for bankruptcy protection in 1Q 2017 alone.  That volume of filings matches the total number of retail bankruptcies for all of 2016 and puts the industry on pace to exceed even the 'great recession' highs. Per CNBC:

Nine retailers have filed in just the first three months of 2017, according to data provided exclusively to CNBC from AlixPartners consulting firm. That equals the number for all of 2016. It also puts the industry on pace for the highest number of such filings since 2009, when 18 retailers resorted to that action.

 

The rising number of retail bankruptcies comes as consumers are making more purchases online, and shifting their spending toward travel and other experiences. Meanwhile, the supply of physical stores continues to outweigh shopper demand, putting pressure on the industry's profits.

 

"It's just kind of this perfect storm where things are coming together, and it's going to continue for awhile," Deb Rieger-Paganis, a managing director in the turnaround and restructuring practice at AlixPartners, told CNBC.

Retail

 

Many of the early retail victims include companies that were snapped up by Private Equity interests during the last down cycle and aggressively levered.  In addition to the following nine retailers that have already liquidated or are working to reorganize, Payless Shoes and Bebe are also expected to file at some point in the not so distant future.

  • Gordmans Stores
  • Gander Mountain
  • General Wireless Operations (formerly RadioShack)
  • HHGregg
  • BCBG Max Azria
  • Michigan Sporting Goods Distributors
  • Eastern Outfitters
  • Wet Seal
  • Limited Stores

Of course, as Deb Rieger-Paganis, a managing director in the turnaround and restructuring practice at AlixPartners, points out, retail bankruptcies and/or store closures, especially from anchor tenants, can push the whole retail space into a downward spiral as "people don't like to shop where there's a lot of vacant space."  So while larger retailers like Macy's, J.C. Penney, Sears and Kmart have avoided chapter 11 so far in this cycle, they're all in the process of closing hundreds of stores and those vacancies are likely to have ripple effects through the industry.

Meanwhile, as we pointed out last month (see "America's Desperate Mall Owners Turn To Grocers, Doctors & High Schools To Fill Empty Space"), America's mall owners are having such a hard time filling empty retail space that they're turning to high schools, doctors offices and grocery stores.

Once a shining beacon of American capitalism, malls around the U.S. are failing at an alarming rate due to a combination of shifting consumption patterns, years of underinvestment by mall owners and a spate of retailer bankruptcies over the past 12 months that have left large swaths of once prime real estate empty (see "Number Of Distressed US Retailers Highest Since The Great Recession"). 

Now, as the vacant square footage grows larger, mall owners are being increasingly forced to turn to non-conventional tenants to fill empty space.  Per the Wall Street Journal, the latest target of mall owners is yet another struggling industry, grocers, with everyone from Whole Foods to Kroger looking to snap up square footage at discount prices.

Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans Food Markets Inc., which is planning to open a store in 2018.
College Mall in Bloomington, Ind., plans to bring in 365 by Whole Foods Market in the fall.
Grocery giant Kroger Co., meanwhile, has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place.

But we're sure it will all work out just fine and wall street will go on buying those mall reits with reckless abandon...you know, because dividend yields.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Chart Man's picture

Let's watch the idiot Dems try to blame this on trump. 

 

Just read she wave. Nice calls lately guys. Thanks ZH.

 

www.shepwave.com/blogs

ShepWave 

ShepWave Important Update for Tuesday Published
by ShepWave.com
Posted: 4/3/2017 17:37 EST

 

The major US equity indexes are at a highly critical point, technically speaking. Many have been trying to call a market top and have failed. This has been going on for a few years now. And many try to give the idea that the markets are ready to rally to higher highs. Again, the key right now is to stay objective and keep locking in profits in the short to mid term trend.

Long Term Investors also need to be watching the technicals. Again, the indexes are at a key point and this cannot be ignored.

Log In at www.shepwave.com for Tuesday's Important Pre-Market / Intra Day ShepWave Update.

 

 

 

Hitlery_4_Dictator's picture

Damn I like Gander Mountain.....some good deals are coming soon I guess

CJgipper's picture

Where?  Bass pro?  Cause it sure isn't going to be a deal at gander mountain.

Hitlery_4_Dictator's picture

Bass Pro is even more of a rip off......I'm saying the liquidation at Gander will drop prices significantly. I remember when cheaper than dirt store front went out of business in 2015...some good deals were found 

Bay Area Guy's picture

If it's anything like the liquidation sales at Sports Authority and Sports Chalet that were held last year, I wouldn't count on rock bottom prices.  Those two places sold their inventories to a liquidator, who then bumped the prices up just to put the items on sale.  To get any decent discounts, you have to wait until the last week or so and, by that time, the inventory is, chartiably, shit.

Jäger's picture

they had CCI .22 for 3.49 last week- that's about it for deals at GM

man from glad's picture

Bought a rifle from them last Christmas. But otherwise I don't shop there as I can find better deals online

buffed's picture

Gander Mountain's closing really could be "Trumps fault."  The bottom fell out of the guns and ammo business without gun-grabbing Dem in the Whitehouse.

chubbyjjfong's picture

Seriously dude, get the fuck off this site. Take your sheep-fuck-wave pimping aliases with you. I would rather eat sasquatch's crotch than click on your silly site. I'd rather be T bagged with chewbacha's ball sac after contracting a raging case of genital herpes from a hairy pubed she-male than looking at any ridiculous casino wave of yours. 

skinwalker's picture

If the shep wave system actually worked, the guys who invented it would jealously keep it for themselves and not share it, and especially wouldn't spam it.

Marilee's picture

Is this seriously your bio 

Personal information
Biography

Transnigger transexual transcultured transcapitalist transhuman.

TheReplacement's picture

Why not?  It might get him another eight years in the Whitehouse.

Marilee's picture

Good charts but the people on here are not traders. 

TheRideNeverEnds's picture

We are about to complete the uber rare three wise men and a baby pattern in the SPX weekly chart. If that happens you better strap in cause this market is going to blast off!

John Beau's picture

First of all trying to post anything legitimate in the comment board of ZH is just a waste of time. That is a good analyst. But you really need to understand that the posters on here are not legitimate traders or even knowledgable in the markets. The perversion on ZH has risen to new heights and it is disgusting. 

 

Stick with your analyst and keep it to yourself. That is what I say. 

Patriotico's picture

I don't come here much anymore. Got pissed offat all the perverts a d had to get new ID after 6 years.

 

ShepWave is only legit analyst left on Wall Street but there are no legit traders left on ZH.

 

 

 

https://www.facebook.com/166578775325/photos/pcb.10154415126355326/10154...

 

 

 

https://www.facebook.com/166578775325/photos/pcb.10154415126355326/10154...

Patriotico's picture

I don't come here much anymore. Got pissed offat all the perverts a d had to get new ID after 6 years.

 

ShepWave is only legit analyst left on Wall Street but there are no legit traders left on ZH.

 

 

 

https://www.facebook.com/166578775325/photos/pcb.10154415126355326/10154...

 

 

 

https://www.facebook.com/166578775325/photos/pcb.10154415126355326/10154...

flaminratzazz's picture

Mom mama we're all crazy now

nathan1234's picture

Retailers are bankrupt

Pension fund are bankrupt.

Muncipals are bankrupt

States are bankrupt.

Banks are bankrupt

The US and virtually all countries are bankrupt.

The entire global financial system is bankrupt.

Sane and deluded men in today's financial world are bankrupt on ideas as to what they can do to save themselves.

flaminratzazz's picture

well it surely seems to me we are FVKED!

I have a green house and a canner.. time to put them to use I think.

Nobodys Home's picture

Stock up on cans and lids while your at it. Won't find those at your empty shelved local hardware store. It's gonna suck once the trucks stop rolling.

Hitlery_4_Dictator's picture

They just changed the lids....they don't last as long. Get the old ones

skinwalker's picture

Everything is bankrupt, and not just financially.

manofthenorth's picture

So many reasons to self insure with silver and gold ;-)  !!

Spigot's picture

Dude, when I read that I started to cry.

I'm trying to dry my eyes but the river of tears keeps rolling.

Then I laughed.

Thanks.

Peak Finance's picture

Hey just curious,

Since EVERYTHING is 100% political now, and CEO's that should be focused on shareholder value are either looting their companies, or, making political statements with shareholder money, consequenses be dammed (yea looking at you starfucks), does anyone think that some of this is political?

Either looters getting out of town early or boards forcing a failure now for political reasons?  

 

MAYBE I find some time to look at books and see for myself if someone makes a recommendation on a suspect company.

11b40's picture

This is my customer base.  The pain is very real, and very long in the coming.  Retailers in general don't know what to do.  Traffic in the stores sucks.  It is the Trade show season, and attendance is down at almost every event.  I am leaving for one tomorrow in NY.  Only have one appointment....for the first time EVER in 40 years.  Many simply are not going, and others have shortened their trips down to 2 days. That means they will only be seeing their key vendors for a meet & greet and to see if they can weasel any extra promotional funds out of them.  

Executives are being chopped left & right, too, as staffs are being thinned out.  Senior Buyers, Merchandise Managers, and others senior execs are being replaced with younger, much cheaper workers.  Everything that can be measured is being chopped to some degree.  Problem is, it's those intangibles they can't measure that makes retail exciting and profitable.  The bean counters don't understand that.  The merchants who built these great retail companies understood that retail needs to be theater.  The financial companies who bought them out don't have a clue....and none of them knows what to do about the Internet.  Right now, they are all out in the marketplace telling their vendors they want direct drop ship for e-Commerce.  I.E., the vendor does everything for them.  Holds the inventory, ships one at a time to the individual consumer, and even prints & send the invoice, but the retailer gets paid, then wants to pay the vendor in 60 days.  The vendors are screwed.  Their business model woks best when they ship truckloads to one destination, not one piece of their product to thousands of destinations.  Then, there is the margin issue.  No one is making any money...simple as that.

Retail has always been long hours, a lot of risk and a lot of work.  Now, there is also a lot of desperation.

Hitlery_4_Dictator's picture

Shit that is sad. Good insight. My wife works at ikea and they are doing well. Super slaves love ikea.

11b40's picture

IKEA owners are Merchants.  To my point, they understand theater and creating a shopping experience.  An IKEA visit is an event.  Costco, same thing.  To some degree, Lowes & Home Depot as well.  There are a few others, but not many.  Finacilazation is driving the nails in the retail coffin.  

Blankfuck's picture

The Mall is pack in Bergen county NJ---oh thats where most BANK-sters live around. Its 20 min to the financial fraud markets in NYC. You should see the fake real estate bloated markets around here. The Fed Fuckers made it all a wet dream again. Isnt that special. Oh but the roads are falling apart with the pavement. Even the lines are faded

MK13's picture

How about a trickle of reality regarding malls? Mall traffic sucks because malls are ghetto no zones where dindu muffins decide to party ghetto style around major holidays.

Malls in America are no longer safe places to go. It's like Gothenburg in Sweden or Paris. Welcome to economy of multiculturalism - everyone with money is looking for places away from crowds to spend time.

haruspicio's picture

One appointment in 40 years? You need to reexamine your career friend.

11b40's picture

Is English your first language? First time in over 40 years with such a rotten appointment schedule.

Peak Finance's picture

Well really I don't really see criminals on this list, here is what I see:

  • Gordmans Stores   - Dont know these guys
  • Gander Mountain - Outdoor bubbler on cheap credit
  • General Wireless Operations (formerly RadioShack) - Doomed from the start  - credit bubble allows this
  • HHGregg    - Fuck me ever been to this place? They suck hard, terrible prices no real reason to exist 
  • BCBG Max Azria - Don't know these guys
  • Michigan Sporting Goods Distributors - Outdoor bubbler on cheap credit
  • Eastern Outfitters - Outdoor bubbler on cheap credit
  • Wet Seal  - Don't know these guys
  • Limited Stores  - Don't know these guys

 

Da chief's picture

This along side the massive waterfall in USD - coming soon to a theatre near you

 

https://forexkong.com/2017/03/27/usd-and-gold-update-big-trades-on-deck/

LeftandRightareWrong's picture

Once one discharges high coupon, dumb OPM debt, others are pretty much forced to follow.

Mtnrunnr's picture

More stores that sell cheap offshore shit witg employees that know nothing about the product because they get paid minimum wage. I can get it cheaper on amazon.

Jäger's picture

ebay is cheaper than AMZN as well as free shipping

RightLineBacker's picture

And they didn't buy a dipshit Libturd newspaper like the WaPo to push their NWO Progressive Liberal bullshit.

Boycott Amazon, WaPoop and fuck Bezos!

Iconoclast's picture

Any Tesla dealerships on that list? Wtf do they sell, cardboard versions of the coal burning dodgems?