The capitalist economy of America provided the most favorable breeding ground for retail stores. Most popular brands loved showcasing their luxury products in the plush malls, and the masses enjoyed shopping from enchanting malls and huge department stores. As much as the brands and the people want to return to that “normal”, the extended impact of pandemic has made that impossible.
As projected by many studies and researches, the largest retail players have failed to stay afloat and have fallen to the invisible virus that not only took lives but also ceased livelihoods of innumerable people. Over 36 retailers, including America’s oldest department store-chain has filed for bankruptcy in 2020 – marking an eleven-year high, reports CNBC.
The American retail industry was already in choppy waters when the lockdown orders were announced in March 2020. But even after the stores reopened, customers didn’t return, the sales dropped drastically straining liquidity and a large number of renowned store chains plummeted into a freefall. By August 2020, about 60% retailers filed for bankruptcy, listing over $100 million in assets – 10% more than 2019, during the same period.
The pandemic accelerated certain industry trends which favored digital commerce and badly hit retail shopping. Consumer habits and buying patterns shifted – people were no longer going out, so sales of apparels, handbags, shoes accessories fell while home entertainment and comfort items were in demand.
While companies with strong digital presence – like Amazon, Target and Walmart flourished J.C. Penny, Neiman Marcus, Tailored Brands and Ascena Retail Group joined the list of biggest American retail bankruptcies, such as Circuit City, Toys R Us and Sears. Here are 2020’s most colossal American retail bankruptcies and the list might swell in 2021, after the holiday season is over.
- J.C. Penny
J.C. Penny had assets of over $5 billion and liabilities of over $10 billion, with 846 stores at the time of filing. The company employed around 90,000 workers (as recorded in February). The store chain has been acquired by Brookfield Asset Management and Simon Property Group in December and about 60,000 jobs are said to be secure, however, if the people don’t return to stores sometime soon, the future of the company can be rather glum.
- Neiman Marcus
Neiman Marcus possessed assets of over $5 billion and liabilities of over $5 billion with 67 stores at the time of filing. This upscale department store-chain filed for bankruptcy in May, marking one of the most high-profile retail collapses of the pandemic. Post eliminating the debt, Neiman brought in a new team of executives while retaining the company’s CEO. The company is currently restructuring its platform and improving its business as Neiman hopes to capitalize a strong rebound in the luxury market.
- Guitar Center
With assets of about $1 billion and almost the same amount of liabilities, and approximately 300 stores, Guitar Center was a 70-year-old market leader in the category of music. The company that used employ about 13,000 people filed for bankruptcy in November. The company has grand rebound goals and its restructuring plans have already been approved by a judge. After reducing its debts by almost 80% and raising $165 million in fresh equity, the company is expected to come out of bankruptcy by December end.
- Tailored Brands
With assets and liabilities of over $1 billion and 1400 stores, Tailored brands filed for bankruptcy in August in a bid to cut its debts and strengthen the finances eroded by the pandemic. The company blamed casualization of corporate America due to work from home trend for its loss of business. It has announced closure of more than 500 stores and 20% reduction of corporate workforce. The company successfully emerged from bankruptcy in early December and has fresh plans for the future.
- Ascena Retail
The parent company of Ann Taylor and Loft, Ascena Retail Group had assets and liabilities of over $1 billion and 2800 stores. Its sales were dwindling since 2016 as women shifted loyalties towards fast-fashion retailers like H&M and Zara. The company sold its Ann Taylor, Lane Bryant, Loft and Lou & Grey brands to Sycamore Partners, a private equity firm, for $540 million.
GNC, J.Crew Group, Brooks Brothers, Stein Mart and Pier 1 imports are the other five big retail chains that has chosen bankruptcy route for salvaging their business.
