S&P: These Ten Retailers Will File For Bankruptcy Next

Tyler Durden's picture

Three weeks ago, we reported that Fitch had put together a list of 8 retailers who were likely next in line to file for bankruptcy. The rating agency speculated that distressed legacy "bricks and mortar" outlets such as 99 Cents Only, rue 21, Gymboree and True Religion would follow what has already been a historic surge in retailers filing for Chapter 11 protection and/or shuttering stores. The Fitch list is below:

  • Sears Holdings Corp (roughly $2.5 billion);
  • 99 Cents Only Stores LLC;
  • Charming Charlie LLC;
  • Gymboree Corp.;
  • Nine West Holdings Inc.;
  • NYDJ Apparel LLC;
  • rue21, Inc.; and
  • True Religion Apparel Inc.

Putting this list in context, over the weekend we presented a chart from Credit Suisse showing that on an annualized basis, some 8,640 - or more - stores would be closed in 2017, the highest number on record.

As we further showed, the number of announced store closures so far in 2017 - whether in bankruptcy or otherwise - is already staggering:

Additionally, as the WSJ previously observed, the number of bankruptcies so far this year has already come close to the total in 2016, with 14 retailers filing compared with 18 last year.

And it's only just beginning.

Taking a cue from their peers at Fitch, analysts at S&P Global Market Intelligence likewise released a list of 10 publicly traded retailers they consider most at risk of default within the next 12 months. As the WSJ notes, the firm’s analysis is based on industry factors, such as intensity of competition and barriers to entry, as well as company-specific metrics.

“The shift to online shopping has left a lot of financial distress in its wake,” Jim Elder, director of risk services at S&P, wrote in a research note. “The results from the first quarter do not suggest that a quick recovery is on the horizon.” As expected, some (surprisingly not all) retailers disputed S&P’s analysis; the rest pointed to previous statements or didn’t respond to requests for comment.

Also notable: while there were some similarities between the Fitch and S&P lists, namely Sears, most of the names in the two lists diverged, suggesting that between Fitch and S&P up to 17 retailers may be going under soon.

Here’s S&P’s ranking, courtesy of the WSJ:

1. Sears Holdings Corp.

Sears has been buying time by making cost-saving maneuvers that include the sale of its Craftsman brand and the closure of 150 stores. On Friday, the retailer said it would shutter 92 Kmart pharmacies and 50 Sears Auto locations this year. Sears “is determined to remain a viable competitor in retail and we are taking all necessary actions to improve our performance,” said a spokesman for the company.

2. DGSE Companies Inc.

The Dallas-based seller of precious metals and jewelry has been struggling with declining sales. It has a market value of about $43 million. Following a leadership change in December, the company said it “eschewed the unsuccessful strategies of recent years” and expects to post a profit in the first quarter for the first time in four years.

3. Appliance Recycling Center of America Inc.

The recycler and seller of household appliances, with about 18 retail locations under the ApplianceSmart banner, has a market value of less than $10 million.

4. The Bon-Ton Stores Inc.

The department store chain, with dual headquarters in Milwaukee, Wis., and York, Pa., reported a $63 million loss in 2016 and expects comparable sales to decline in 2017. It operates about 263 stores. Although it had more than $2.5 billion of revenue last fiscal year, it has a $13 million market value.

5. Bebe Stores Inc.

The mall-based women’s apparel chain, which was popular for its fitted clothing in the early 2000s, has suffered from declining foot traffic and a consumer shift toward more subtle styles. Last week, the company said it would close its remaining 168 locations and only sell online.

6. Destination XL Group Inc.

The chain sells men’s big and tall apparel in about 344 stores. The company said in March it would slow store expansion, increase marketing spending and improve its digital operations. It projected a net loss for 2017 on about $470 million to $480 million in revenue. “We strongly believe the analysis by S&P Global Research is misguided and does not in any way, shape, or form fairly represent our company’s current financial position,” said David Levin, CEO of Destination XL. “Our financial condition is extremely healthy.”

7. Perfumania Holdings Inc.

The specialty retailer, which sells perfumes and fragrances, has been facing dwindling foot traffic to its stores in malls and tourist-dependent areas. The company has a market cap of about $14 million.

8. Fenix Parts Inc.

A small reseller of automotive parts reclaimed from damaged vehicles. It has a market value of less than $25 million.

9. Tailored Brands Inc.

Tailored Brands, which primarily sells men’s apparel, has been struggling amid increased competition from several e-commerce players. Comparable sales at Men’s Wearhouse, the company’s largest brand, fell 2.2% in the fourth quarter and are expected to decline in fiscal 2017. Shares are down nearly 50% this year. The S&P’s analysis is “extremely misleading” because it “does not take into account debt maturities and our first debt maturity is not until 2021,” a company spokeswoman said.

10. Sears Hometown and Outlet Stores Inc.

The retailer, which was spun off from Sears Holdings in 2012, closed 160 stores in fiscal 2016 as part of an effort to cut costs. As of Jan. 28, the company or its independent dealers and franchisees operated a total of 1,020 stores. It had $2 billion in revenue last fiscal year, but has lost money for three straight years.

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Skeero's picture

Good fuck Sears and their shitty Craftsman tools. How many times do I have to replace the same grinder? (Buy a new one and return the broken one..) 

FreeShitter's picture

Snap-on or gtfo....nah I used love craftsman but their quality has gone down hill.

Skeero's picture

I have a silver vein matco triple bay box, that's full of snap on tools. I signed up for an automotive class at local community college. Got the 50% off discount through snapon and matco. Bought a ton of shit, then dropped the class after the second week. I never actually did anything in the class, I just wanted the tools. Paid $1200 for the class.. That saved me around $10k lol

FireBrander's picture

Sears filed bankruptcy (with it's customers) many years ago; now it's time to make it legally official.

FireBrander's picture

Off topic...maybe you guys can help me...Denninger posted what he used for cell service...I read it, sounded like a good deal, but now I can't remember what company it was...I'm looking for a reliable service at $15/month or less for a light user.

Peak Finance's picture

Tracfone - discount reseller of the Verizon network (By the minute plans) 

Straight-talk - discount reseller of the ATT Network (Flat Rate Plans)

Freedompop - TMobile discount reseller, whatever the hell that network is, I hear complaints but I am ok with them,  - 13 bucks a month for metered 4gl hotspot, it's faster than my naked DSL. I use this as back-up only so don't care about the meter. 

FireBrander's picture

Tracphone - blah...the best deal I could see from them is ~$11 month for 100 minutes, 100 texts, 100Mb of data...and thier customer service is a 0 out of 10 from what I hear.

What Karl posted was a much better deal than that; but I can't find the company name.

Shocker's picture

Consider this the next leg down in the economy, if all these place go under

Layoff / Closing list: http://www.dailyjobcuts.com

-

RAT005's picture

I'veo only ever heard of 2 of the 10.

 

Never One Roach's picture

How can Bebe's go bankrupt/ Isn't it in the middle 0f SF, the Land of Flowers and Unicorns where everything is "awesome"?

We need to file an appeal with the SF 9th Circus immediately to save bebe's!

Shocker's picture

please don't give them any ideas, hahahahah

glenlloyd's picture

Could they even ever sell enough Crocs to keep a single store open? Retailing and the guru's running that show are total morons anyway.

vealparm's picture

I've used Tracfone for about 10 years, no problems. Have an old school flip phone.......fuck smart phones, I don't need one to function in life......don't have the need to be bullshitting with people on the phone all the time.......or to text. 

When you buy a phone you they give to double or triple minutes for the life of the phone. I buy the 3month/60 minute card so I get 120 minutes for $19.99 at Wally. That comes out to about $7.00 per month.

jus_lite_reading's picture

Good point. I'm actually surprised they managed to hang on this long.

baldknobber's picture

I have one almost as good. I have a cousin whose kid decided he wanted to be a diesel mechanic, Mom and Dad sent him to a trade school and of course he had to have a box and full line of tools. Kid finished , screwed around for a year or two  finally got a job at a fast lube place. He kept telling everyone he couldn't find a job even though I deal with shops and trucking companies that are begging for help. Turns out the kid didn't want to start on second shift and really didn't like turning a wrench that much. Bottom line I bought a bunch of tools for pennies on the dollar

man from glad's picture

As an old timer mechanic to a newer guy - TAKE CARE OF YOUR KNEES AND BACK!  - That is all..

Jack's Raging Bile Duct's picture

You paid $1200 to sign up for a singular community college course? That's $300 to $400 per credit hour. Where the hell did you enroll?

Underground's picture

Wow what a trick! You should write a blog...

NoDebt's picture

Harbor Freight.  You MUST know what stuff is good (massive bargain) and what is crap (avoid no matter how low the price), but I've been buying stuff there for years now.  

BTW-  All the major tool brands are made in China now anyway.  Don't think you're helping out many American factory workers just because you have an obsession with tools that have the MAC or Snap-On logo on the side.

swmnguy's picture

Agreed on Harbor Freight.  You have to be super-careful and know what you're doing though.  Disposable is as disposable does.  But no point spending top-dollar on some stuff.

And yes, all that stuff is made in China.  I'm glad I bought all my tools 20 years ago, when Porter-Cable made quality stuff.  Recently I rebuilt the batteries on my 25 year-old PC 12v cordless drill, and it's still a much better tool than the 18v DeWalt kit I bought for less than half what I spent on the Porter-Cable 25 years ago.  But again, if you know the tools are disposable, and you buy accordingly, you can do OK. 

Skeero's picture

If I buy something from harbor freight I expect it to break. All though my air compressor I got from there 6 years ago still works lol. The second one at least, the first one was DOA. Ahahaha.

I quit going there because it was almost 30 mins away, and I got tired of making multiple trips if something broke.. or was already broken..

Bemused Observer's picture

For you 'tool guys' out there...learn how to go garage-saleing. If you remember the great old Craftsman stuff, and other tools of quality, then garage sales are where you will find them. Often very, very cheap.

But these are the genuine item! Of all my hand tools, my best are real old Craftsman pieces...damn! They made them GOOD back then! Many are older than I am, and will STILL be working well after I'm gone.

 

But holy shit...new tools are just CRAP! Seriously, I'm better off using an old butter knife as an emergency screwdriver than I am using one of those cheap Chinese things.

FireBrander's picture

"Craftsmen" tools are just Harbor tools rebranded and tripled in price.

For non-professionals, Harbor tools are more than good enough to get the job done...thier sandpaper is total crap though...

shizzledizzle's picture

Hot rod magazine did a torque wrench comparison a while back and guess what got #2? Pittsburg (harbor freight). Some of their stuff is good, some of it not so much. Considering purchasing a bandsaw mill in the not too distant future and will probably go with the harbor freight. It's about $500 less than the nearest competitor and frow what eveyone says, if you take the time to set it up right it is a good mill. 

Skeero's picture

Depending on the motor, and power level I'm building to. No way in hell I'm using a harbor freight torque wrench. Unless I'm going to test the torque accuracy first. And then check everything I torque with another torque wrench.

NoDebt's picture

I'm not sure how much faith I would put in the calibration of a Harbor Freight torque wrench.  I have a 30 year old Craftsman for that and I know it's dead-nuts-accurate except at the extreme ends of it's range.

But, let's say we're just talking about a simple breaker bar.  I got a Harbor Freight 25" breaker bar and the thing is an ANIMAL.  I've had me hanging my entire weight on it upside down under a truck frame with a 2' pipe extension on the end of it for extra leverage.  Fucking indestructible.  I'd put it up against the big name versions any day of the week.  $20 vs. $100 was the price difference vs. Snap-On equivalent.  I'll pocket the $80 and forgo the bragging rights of having the "right" logo on the side of the tool.

 

 

man from glad's picture

I still have my old beam type Craftsman torque wrench from the 70's. Still going strong. IMO any click type torque wrench has to be sent out and calibrated. I am always amazed at how guys can dump $20-30k into an engine and not use an accurate torque wrench.

Skeero's picture

Also that is a good bandsaw lol. The chop saw from there was really good. It took 2 years of constant cutting of stainless before it gave out.

Dutch's picture

My HF rule of thumb: If it plugs into the wall, or tool failure will maim or kill someone, don't buy it there.

Underground's picture

I try to tell my Mechanic Husband this all the time.... But the experience on the Snapon truck is amazing he says! I like to get Vintage tools from the flea market. Support the Americans directly at very discounted prices.

Entourage's picture

Those cuckolds at The New York Times have never heard of Craftsman.

rejected's picture

Most of my tools are Craftsman (Made in USA). Only one ratchet failed over the last 50 years. Sears made good on it. Have some from HF but only use them for easy work. They may be good but I'm not willing to risk my hands and I have had several fail. Had a drill from HF that I actually called 'old smokey'. Lasted one year, amazingly enough. 

It is sad about Sears but they had no choice to go Chinese. I watched Americans buy the Chinese crap over USA made tools because of a couple of dollars. You can literally feel the difference in the smoothness of the ratchets, the weight of the wrenches, etc. But quality in America has went the way of the Dodo bird. It's cheap, chEAP, CHEAP. Then you hear the complaints. The thing broke too soon, or it stopped working or other shit. 

Back 'in the time' I could walk into a store and find pretty much what I needed. Could look at them, pick them up, feel them and compare. AND THEY WERE AFFORDABLE. Today you have the Amazon Chinese shit. You look at a picture that usually has a disclaimer that this may not be exactly like the item you will get. You cannot touch it nor can you compare the operational aspects. If you pay shipping it will cost more than the same products in a store. If you go free shipping they make you wait a full 10 working days. When I need a tool, I need it now,,, not 2 weeks from now. I have put Amazon last on my list of vendors. Only if I cannot find it else where.

Again all the stores are going 'online'. Soon about the only thing local will be groceries and even that is going online. People are now so lazy they'll allow someone else to pick out their food.

I have heard many call others traitors over political shit, but one has to wonder who the traitors are when buying stuff of far less quality over home made goods because of a few dollars. Putting Americans out of work isn't what I would call patriotic. Today it's impossible. Through changes in law,,,  products can have made in USA even if they were just partially assembled here.

And if it was actually made in the USA there is a damn good chance it is from prison labor, something Americans accuse other countries of doing.Their hypocrisy know no bounds.

Boy do I miss the old America that none of today's youngins will ever get to enjoy.......

Entourage's picture

Thanks be to you for this.

Two Theives and a Liar's picture

+1 Spot on...somewhat depressing but there's still a few pockets of good ol' American quality out there.  What's really depressing me more is the poor quality of human relations now in America. I had some d-bag in a pickup nearly run me off the road this morning for no apparent reason. We were not "racing" nor was I road raging...he just HAD to be in front of me even if it meant literally pushng me onto the shoulder. I let him go...backed way off and he still wanted to f*ck with me ...stopping short, etc. Totally psycho and there's more and more of these angry, broken people stalking the country. Thank GOD I managed to get a CCL! The youngins are in for a savage future I'm afraid.

Entourage's picture

The savage future of self-driving cars.

man from glad's picture

"The youngins are in for a savage future I'm afraid."

Oh hell yeah. If they are this nutty when things are still fairly comfortable imagine what they will be like during some serious hard times. (which are coming) Kids today are clueless. For example they have no concept of what it takes to get a piece of broccoli to the dinner table. The energy put into growing it, picking, delivery etc. They just think it literally "comes from the back" of the grocery store. Pretty pathetic.

TheReplacement's picture

I feel you about buying American made but...

1. If the price is significantly higher for dubious value, buying the cheap version.

2. If the help at the store is shit then I'm not paying more just for the pleasure of dealing with either a pompous asshole or a completely ignorant sales clerk. Again, no value for the price.

3. The manufacturer/store is politically connected to people/orgs who are trying to kill the country in which I was born.

barysenter's picture

Remember what they cost you when you're making out the bill for fixing their shitty overpriced crates.

man from glad's picture

I'm an auto mechanic semi-retired. I can assure you Craftsman handtools are NOT shit. Been using them for DECADES. I have 4 large tool boxes of Matco, Snap-on, Mac, Cornwell, S&K, Craftsman, Pencraft, Lisle, Stahlwillie, Hazet (yeah lots of German stuff as I am a Porsche Tech) Etc., Etc. I have never ONCE broken a Craftsman wrench. Can't say the same about the others though. I do think the new polished line are not as robust as the old ones, but they are on par with tool truck wrenches (IMO!). The old style Craftsman wrenches were absolutely indestructible. Every year I go thru the boxes and replace the screwdrivers. Anything with a dull tip gets replaced. The counter guys/girls know me and the service is great. I still have my old 1970's Craftsman dwell meter and timing light - they are classics!

I will be very sad to see Sears go. It already is a shadow of it's former self. I wish you youger guys could have seen this place in it's glory days. I'm old enough to remember when one could buy a bolt action rifle there and parts of the store had wood creaky floors and buzzy old florescent lighting (Chicago). Also the metal/wood working equipment was just amazing. I still have my cast iron table saw from them. It will last for generations.

Anyway just Sad. Sad. Sad.

Two Theives and a Liar's picture

The catalog they used to print when I was a kid was amazing. You could literally buy a HOUSE from SEARS and have it delivered...ready to build! Sad indeed. 

peopledontwanttruth's picture

Yup should have known when Tatter Salad said his wheel fell off. He's going to have to change his dialogue especially for the millennial crowd it will go right over their heads. Kinda like us telling our kids and grandkids how we use to play outside all day with nothing to drink except garden hose water.

vealparm's picture

Sad how times have changed. Had my real first job at Sears in Hackensack NJ back in the late 1950's. Was a busy and bustling store with many many knowledgable employees and good products. 

They lost their way a few decades ago. Like most all retailers in America, they cheapened their products and went to Chinese shit products. People like buying their Chinese shit online now.

Macy's will be gone to in the not to distant future. No big fan of Costco either. They also sell Chinese shit but put it in fancy boxes to fool the masses....plus they force you to buy oversize quantities of everything......and you have to pay them to shop there.

TalkToLind's picture

Nice list. Where's Tesla?