These Eleven Retailers Will File For Bankruptcy Next, According To Fitch

Tyler Durden's picture

One month ago, we presented a stunning fact from Credit Suisse: barely a quarter into 2017, [annualized] year-to-date retail store closings have already surpassed those of 2008.

According to the Swiss bank's calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

Another striking fact: on a square footage basis, approximately 49 million square feet of retail space has closed YTD. Should this pace persist by the end of the year, total square footage reductions could reach 147M square feet - or just over 5 square miles - another all time high, and surpassing the historical peak of 115M in 2001.

Furthermore, according to a recent WSJ analysis, at least 10 retailers, including Payless ShoeSource, hhgregg, The Limited, RadioShack, BCBG, Wet Seal, Gormans, Eastern Outfitters, and Gander Mountain had filed for bankruptcy protection through the end of April, which compares with nine retailers that declared bankruptcy for all of 2016. All of the companies in bankruptcy have announced plans to shutter some if not most of their stores.

Then after taking a brief one month hiatus retailer bankruptcies resumed last Monday, when struggling teen clothing retailer Rue21 became the last to filed a prepackaged Chapter 11 petition in Pennsylvania bankruptcy court, listing both prepetition assets and liabilities between $1 and $10 billion.

Rue21’s bankruptcy filing lifted Fitch’s U.S. retail LTM institutional leveraged loan default rate to 1.7% from 0.9%. An impending bankruptcy from Gymboree would further lift the retail TTM to 2.7%, Fitch said. Unfortunately for the US retail industry, and despite such upbeat pieces as "Why the Rout in Retail Shouldn't Be a Big Worry for U.S. Economy" written by Bloomberg's in-house US economic cheerleader, the rating agency expects a flood of future defaults, and forecasts the retail loan default rate at 9% on roughly $6 billion of defaults, though it concedes that "the fate of Sears Holdings and the resolution of J. Crew Group’s bond exchange could materially alter the projection."

It also noted that the high yield retail default rate is also expected to finish 2017 at 9%, with more than $4 billion of likely defaults.

More improtantly, Fitch has also revised its "retail concern list" which compiles issuers with a significant risk of default within the next 12 months, and which now lists nite retailers, up from eight the last time we showed the list in April, including:

  • Sears Holdings
  • Gymboree
  • Nine West Holdings
  • 99 Cents Only Stores
  • True Religion Apparel
  • Charlotte Russe
  • Charming Charlie
  • NYDJ Apparel
  • Vince.A
  • Claire’s Stores
  • Chinos Intermediate Holdings (J Crew Group)

We expect his list to grow over the coming months, as some names fail only to be replaced with even more near-death retailers in a country where as the Fed reported earlier, 23% of Americans cant pay their monthly bils while 44% of Americans have less than $400 in cash.

Meanwhile, Jeff Bezos is wondering how he is still not the world's richest man yet. As a reminder, the market cap of Amazon is more than 8 times the value of the entire US department store index...

 

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serotonindumptruck's picture

Either UPS or FedEx brings it to my front door the day after tomorrow, or you retailers can suck it!

Shocker's picture

Just more recovery news...

Full Layoff / Closing List: http://www.dailyjobcuts.com

-

Creepy_Azz_Crackaah's picture

Welcome... to Amazon.

Maybe these empty stores can become Amazon warehouses?

847328_3527's picture

"I fundamentally changed America!"

 

~Soweeto bin Bama

J S Bach's picture

Unfortunately... as great as the internet is... is has been and will continue to be - the bane of all traditional retail "stores" of old.  With minimal shipping costs given to "loyal" customers... it's actually cheaper to shop for ANYTHING these days online rather than going to a Sears, JC Penny, Best Buy, or any other physical store location.  I, personally, LIKE going to a proprietor to buy my goods, but the reality is that most of the younger generation are opting for "convenient" mail deliveries instead.

JamesBond's picture

Hard to believe that there are still K Mart stores open in the US

 

Put a bullet in its head already

 

 

 

 

 

Taint Boil's picture

Last time I was in K-Mart there weren’t even any cashiers … when a customer was ready to check out they would come up to the register.

Shelves barley stocked, dirty and dusty, no stock, empty, etc. I don’t know how they even pay the electric bill. There is no way the make any profit ….. like you said, I can’t believe they’re even open.

stizazz's picture

Too many stores, too many malls...

too few jobs.

drstrangelove73's picture

Yeah they down vote you,but take a look at Chik Filet and the Home Depot-they close on Sunday and they're killing it.You ain't wrong bro-these are just haters

Intoxicologist's picture

When I was a kid, we affectionately referred to K-Mart as K-Mapart.

Tijuana Donkey Show's picture

The service is better online, as is the selection. Home Despot is a great example. Only the cheapest bullshit, and it all breaks quick. I can get better online, and not get treated like a criminal for my efforts. 

dilligaff's picture

I wonder what will happen to Amazon when the free money from the fed ends? They barely make a profit and have shitloads of debt.  If they can't keep borrowing and refinancing the debt, they'll be screwed...

Just saying...

True Blue's picture

The goal is that -by the time the free fiats come to an end, they'll be the last one standing. JP Morgan's IMM operated on the same playbook. Price war to kill the competition, then raise prices until you kill the market itself.

sessinpo's picture

When the free money really ends. It ends for everyone. This nation is bankrupt and the biggest piece of shit organization that finally needs to be cut off from free money is the federal government. And yea, it is gonna suck. be real painful and people are gonna die.

Xena fobe's picture

They become Chinese condo developments. 

booboo's picture

Most every home in America is a retail warehouse just waiting for opening day but the yard sale permits are hard to come by

DPLETTENBERG's picture

I got a solution for the old K Mart buildings. Clear everything out of the buildings and build a a little town in each building. Have pathways running through it with lamp posts and some plants and trees around. Call them K mart condos.

Maybe ypu could think of a better name.

They would be easy to make as they would be out of the weather plus you would have the security of a gated community.

True Blue's picture

Same with dead malls. Bring in some decent sit-down places in the former food court, a grocery, pharmacy and some shopping so you have a self contained little 24 hour village. Maybe senior citizen places too. Secure the parking lot (and sell half of it) and you should be turning a fat profit in no time.

 

The only problem is paying off the local zoning comission -and they're usually more corrupt than anyone else in local gov't.

justin423's picture

How many are publicly traded like sears where you can Put options?

Sudden Debt's picture

I can now order anything I want and they even deliver it on sunday at the hour I want them to bring it.

Adapt or die and well... they'll die. 

No loss. 

It's actually a good thing, no reason to keep those dino's alive.

 

847328_3527's picture

Much deeper then that.

Have you read any of these recent ZH articles? Americans are broke and live paycheck to paycheck so forget shopping at Macys or online at Amazon. Can't do it with no money.

The people who DO have money DO shop online since they don't want to get mugged at the mall parking lot.

It's all common sense and was very predictable years ago.

JackT's picture

On Sunday they deliver using USPS vehicles. Do they pay for that?

Taint Boil's picture

No .... it's for free. JFC!

Bludklot's picture

I recall something like a $5 billion contract between the USPS and Amazon for weekend delivery. The contract essentially saved the Post Office, whose existence was based on delivery of advertizing from the five or six largest advertizers in the country.

Refuse-Resist's picture

Thank you diversity for making us so strong. Thank you (((liberals))) for agitating to flood the Untied States with such high value shitskins.

And subsidizing the breeding of obsolete farm equipment.

Dindus + Aloha Snackbar+Si senor = GET ME THE FUCK TO WHERE WHITE PEOPLE LIVE.

JESUS FUCKING CHRIST even in rural Applachia its starting to look like NYC minus orthodox jews.

THEY DON'T ADD VALUE, JUST COST.

 

 

vulcanraven's picture

Another perk to shopping online is you get to avoid all the drug addict beggars that love to sit outside brick and mortar stores, putting on their saddest face to try and guilt some money out of you.

newdoobie's picture

What do ya mean they don't got no money.

Free credit card offers in the mail everyday!

MK13's picture

It's all good - except for few million entry jobs that will now go away - enabling America''a FSA to expand its ranks.

Not a win at all.

Sudden Debt's picture

There's more in life then to work in a store.

These kids should get creative, they're the future and people sitting at the registry aren't the future.

Only if these kids get creative and start new businesses America will survive.

If your future depends on jobs like that... if your only hope is finding a job like that... you really need to collect your guts and dare to invent.

Most people think that everything has already been invented and that it's so hard to start a biz.

Most think they need to much money but all you need is time, a computer and a phone and guts to face the world and sell with conviction.

There's to many people who feel like they have no skills.

newdoobie's picture

some rich moron invented the selfie stick

takeaction's picture

Retail stores are TOAST...Why?  Because of situations like this...

For you older guys here... You will love this.

Just got the new Samsung Galaxy Tablet (Android) delivered..(1 day).$159.00 for the 10.1" 32GB.  Then download the Android App "Pinball Arcade"

These are all of the Pinball machines we grew up with.  I can not believe the effort this team of people put into recreating all of these games from my childhood. NOTE:You can download this to your Android phone too, but you need a huge tablet to really appreciate this...

https://www.ouya.tv/game/Pinball-Arcade/

serotonindumptruck's picture

What's a pinball machine?

(j/k)

Sudden Debt's picture

Last week I was saying to some young people of 25: COOL! THE NEW ALIENS MOVIE IS COMMING OUT!!!

they said: ...what's aliens?....

I...I....

These kids knew none of the classics. I kind of felt old :) 

The Real Tony's picture

If you're strong enough it's something you pick up and hit a video games player over the skull with.

man from glad's picture

Us older guys know how to have fun. It's kind of flattering really that they came out with those virtual pinball machines and all these muscle car redux's of the classics we used to own. Damn if I still had half the cars I had back then I could have retired 5x over by now. We're talking GTO's, Vettes, Beetles, 50's pick-ups, etc. Those were the days!

TheMachinist's picture

And you knew who you were then... Girls were girls and men were men.  

The Real Tony's picture

Too bad they didn't get someone from the A division of PAPA to work with the software developer. Some of the pinball simulations have the flippers "spot on" and other simulations the flippers are night and day off... sad!!

Refuse-Resist's picture

When stores are open 70 hours per week, pay their employees just over minimun, and when every employee at that store has more than 1 job you know the economy is fucked.

 

I picked up a part time job at a national auto parts retailer just for the discounts. What a clusterfuck of desperate people and high paid execs exploiting the fuck out of them.  I knew it was bad but not this bad.

 

Around here, there are three kinds of jobs:

1. Healthare -- best paying a most available positions

2. Governement -- fed,state, local, county, town, schools.

3. minimum wage.

 

Aboout 80% of the people here are not working in the first two. Abandoned factories, meth/opiod addicts, and poverty. Thank you NAFTA, open borders, and free trade globalism.

Gutting the country has been a great (((success)) for some people.

Matchless's picture

Short sided and totally stupid thinking.  All the retail outlets close and you drive up unempolyment to insane levels.  The interet needs to be put on the same level as brick and motor stores, unless this happens retail will die.  Once you have no way of checking merchandise before you buy you'll be screwed.

neidermeyer's picture

I'm surprised Radio Shack is still in business... Claires sells junk jewelry to young teens ... and they don't go to the malls anymore because their parents don't go there..

DPLETTENBERG's picture

I'm surprised that there isn't an APS (Amazon Parcel Service) yet. I know in Seattle Amazon makes a lot of deliveries with there own trucks, They also have these neat locker systems located around the city where you can pick your stuff up instead of having it left on your door step. Amazon sends you a bar code which you scan at the locker location and the correct locker opens so you can get your stuff. Anazing!

Never One Roach's picture

8 years of Obamanomics and sending millions of American jobs overseas has consequences.

 

Unemployed peeples, frozen wages and broke seniors don't buy much.

Sudden Debt's picture

Nop, just people who can't adapt to a changing world.

It's called evolution and you can inovate or die.

Obama has nothing to do with it, and believe me, I don't like that guy but I'm a realist.

CheapBastard's picture

A Quarter Of American Adults Can't Pay All Their Monthly Bills; 44% Have Less Than $400 In Cash

http://www.zerohedge.com/news/2017-05-20/quarter-american-adults-cant-pa...

Sudden Debt's picture

yep, a quarter is to dumb to wipe their own ass

HardAssets's picture

Says the guy who wrote 'to' instead of 'too'