Wednesday, October 5, 2022

"15 Retailers That Face Bankruptcy As Deep Dark Winter Ahead"

Full screen recommended.
"15 Retailers That Face Bankruptcy 
As Deep Dark Winter Ahead"
by Epic Economist

"Things just seem to keep getting worse for America's troubled retailers. One in ten retail companies is at risk of closure this winter as we enter another economic downturn and consumers roll back their spending on non-essential goods. New data shows that the number of businesses at potential risk of defaulting their debts, going bankrupt, or closing shop for good continues to grow. In fact, earlier this year, Toys 'R' Us CEO warned that a flood of bankruptcies would hit the retail sector during 2022's final quarter as the compounding effects of inflation, supply chain shortages, transportation disruptions, and tighter credit conditions kept on weighing on the balance sheets of distressed companies. “We are in the worst supply chain crisis that any of us can remember and there is no sign of the problems easing before the end of the year. For retailers, the problems could be particularly severe as they prepare for autumn and peak trading in the months building up to the holiday season,” added Brightpearl CEO Derek O’Carroll. “We are still in the relatively early stages of this crisis with the impact of global events just starting to really hit home.”

For example, Tuesday Morning is amongst the long list of retailers that already filed for bankruptcy and are now at risk of going entirely out of business. A dramatic revenue decline in 2020, led the retailer to run out of cash and seek protection as its debt burden increased by $10 million. In the company’s most recent period, it reported a 7% drop in sales, and it projected an adjusted loss of up to $29 million for its current fiscal year. S&P Global Market Intelligence has listed Tuesday Morning as one of the most vulnerable retail companies right now. This holiday season is going to be a make-or-break moment for the already bankrupt retailer that closed 200 stores since January 2021. But if projections turn out to be right, this means the near-term future of the company is going to be extremely gloomy.

Similarly, the Digital Brands Group is warning that it could go bankrupt by year’s end due to a shortage of liquidity. 2022 was a year of extensive losses for the developer. In February, it was sued by creditors over late payments. One of them demanded the retailer put its expansion plans on hold until it was paid for goods shipped years ago, in 2019 and 2020. In the second quarter, the company’s operating loss was at $10.7 million. It also owes $6 million to a secured lender, which matures in December, and creditors are on the edge of their seats right now due to the high risk of default. Spending in the luxury sector has been on a steady decline, and with inflation still biting, the landscape doesn’t look good for the group.

In a new report on vulnerable retailers, Creditntell cited “bloated” inventory levels as a major pressure on margins and profits. The imbalance led major companies, including Walmart and Target, to cancel billions in orders recently. “Potentially the biggest stumbling block will be the consumer,” Albert Furst, chief operating officer of Creditntell, highlighted in a recent interview. With store closures still mounting while foot traffic declines, a financial disaster is looming for U.S. retailers in the near term. And in today's video, we listed some of America's most iconic brands that are in danger during the make-or-break holiday season. If you're a loyal customer of one of these brands, maybe you should visit their stores while you still can, because soon, they may disappear forever."
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