Warning: your favorite company might be at risk of shutting down soon. Or in some cases, it is already gone. With the trend of online continuing to grow, the need for physical stores is decreasing. And with people starting their own businesses each day, big companies are extra vulnerable to losing customers. Thanks to Amazon, people can have anything they want shipped to them in two days. One company that has felt the pain of that first-hand is Toys”R”Us. Click through to learn which other companies are at risk of shutting down or already have. You probably didn’t even know about some of these!
Abercrombie & Fitch
It seems that Abercrombie & Fitch is in big trouble. The company was facing declining sales so they acted promptly. In March of 2017, they announced the closing of 60 American stores that had expiring leases.
On top of that, the company has shut down hundreds of other store locations within the past few years. They are trying to get on board with the new paradigm and focusing more of their efforts on online sales. Now, where will kids go to get that awesome-smelling cologne?
Many of the stores that you will see on this list are struggling thanks to foot traffic dropping at shopping malls. And for J. Crew, whose stores are mainly found in malls, you can be sure that they are being affected by this dilemma. In Q3 (quarter three) of 2017, their sales fell five percent.
The chairman of J.Crew thinks it comes down to one thing. “Clothes are just not that important or as important as they were,” said Mickey Drexler. “[People are] not really hanging around in shopping centers,” he added. “[Cell phones] are local villages, and you don’t have to go to the villages to see people.”
Let’s go on and learn what the issue is with other stores.
In May of 2017, rue21 filed for Chapter 11 bankruptcy protection. They were hoping to bring down their debt and gain more capital in support of reconstruction. The teen-aimed store has more than 1,100 stores and has assets and liabilities ranging between $1-$10 billion. The CEO thinks the company is safe for now.
“Even in a challenging environment, we are fortunate that rue21 has highly relevant brands, an enthusiastic and loyal customer base, and hundreds of highly performing stores,” rue21 CEO Melanie Cox said in a statement. “The agreement with our lenders represents their confidence in rue21’s future success even at a time of significant retail industry change.”
If Sears isn’t already closed down by the time you’re reading this then they are well on their way in 2018. They have been in reverse for years, closing stores and losing revenue at a fast rate. Their main ingredient for survival has been selling assets and getting money from funds connected to their CEO.
That tactic can only last for so long. They are running out of things to sell! They had $8 billion worth of assets and $12 billion in liabilities at the end of Q2. So as you can see, unless something drastic happens, Sears won’t be around much longer.
American Apparel was one of the stores that had a certain sense of entitlement. They say that people ask what you do for a living so they can determine how much respect to give you. Well, if someone asked what you were wearing and you replied American Apparel then you got some respect points. The company closed all of their stores down after filing for bankruptcy in 2016.
Since then, they were acquired by Canada based Gildan Activewear. They worked out a deal worth $88 million. Up next is a store that the inner child in you will be sad to say goodbye to.
Toys”R”Us is where our childhood dreams came to fruition. This is more than just a toy store, it is an icon. They also filed for voluntary chapter 11 bankruptcy protection in hopes of battling debt. The company is $4.9 billion in debt with $400 million of that having interest payments due in 2018. Another $1.7 billion is due in 2019. Stores like Target and Amazon are smelling blood.
“Target, Walmart, Amazon — they’ve smelled weakness for some time, so they’ve stepped it up in their toy selection,” said Kelly O’Keefe, a professor of brand management at Virginia Commonwealth University.
Here’s another store that relies on foot traffic. Because how else are you going to determine how good a fragrance smells if you don’t sniff it for yourself? Sure, you can read a review about it but those words don’t capture the essence of the scent. Perfumania filed for Chapter 11 bankruptcy at the end of August 2017.
They said they planned on recapitalizing and trimming the store count to “better align with current consumer shopping patterns, increase investments in its e-commerce business” and to come out as a private company. They have plans to close 64 of their 226 stores.
The women’s clothing store concentrated in Minnesota, Iowa ,and Wisconsin looked to achieve bankruptcy protection back in March of 2017. Tiger Capital Group conducted the going-out-of-business sale for the company. They were founded in 1950 and their website seems optimistic about their return, saying they’ll be back soon.
“The company’s difficult decision to close all stores is emblematic of the pressures facing mall-based specialty apparel retailers in the wake of ever-increasing competition from big-box ‘fast-fashion’ chains and e-commerce sites,” said Michael McGrail of Tiger Group.
Another teenage apparel store facing hard times is Wet Seal. The second word in the previous sentence is the main reason Wet Seal has been sinking. Teenagers do things differently than their elder shopping counterparts. Greg Portell who is a lead partner in retail practice for consulting said the main issues facing Wet Seal and others like it are “a group of consumers who are expecting faster, more responsive, apparel options.”
They filed for Chapter 11 Bankruptcy in 2015 but that didn’t help so much, as you can see. Their liabilities outweighed their assets by $40-50 million.
True Religion Apparel
The jeans that cost a fortune are in big trouble. True Religion Apparel is another company that filed the ever-popular Chapter 11 action, hoping for a revival. “After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” True Religion CEO John Ermatinger said in a statement.
While they aim to stay in business, it might be a challenge for them. True Religion has about 140 stores but they are planning to shut down an undisclosed amount.
Sears and J.C. Penney are really similar retailers, similar to Wal-Mart and Target. But thankfully, J.C. Penney isn’t in the same bad predicament as Sears. But, that would be like saying someone with one eye sees better than someone who wears glasses. They both have trouble with vision.
The CEO has made some bold moves giving them boosts in comparable-store sales. Still, the chain is losing money. Even with the rise in sales, J.C. Penney’s loss grew to $128 million in Q4.
Just when you thought these problems only affected apparel stores, another one bites the dust — up next.
Barnes & Noble
Barnes & Noble has expanded beyond just filling our hearts with the books that shape our lives. They have added more merchandise and a food service to their chains. Still, they are as vulnerable as any of these other companies you have learned about so far.
They have been losing money and market shares for the past few years now and saw their sales dip by 7.9 percent in Q2 of 2017. Barnes & Noble’s overall loss went from $20.4 million to $30.1 million that year as well. They hope serving alcohol in some locations will help.
The women’s footwear company based in New Jersey filed for bankruptcy in September of 2017. They said they would be moving forward by reducing their retail locations by a great amount. “A critical portion of the company’s restructuring is a significant reduction in the number of retail stores it operates in an effort to realign the business with the changing marketplace environment,” the company said in a press release. There is no telling yet how many stores will be affected but Aerosoles plans to keep four flagship stores in New York and New Jersey.
Once they closed all 250 of their stores, The Limited filed for Chapter 11 bankruptcy in January 2017. Not too long after that, a private equity firm called Sycamore Partners bought their intellectual property. That included the trademarks, social media accounts, and website address.
Liz Dunn who is chief executive of retail consulting firm Talmage Advisors gave her two cents on the situation. Shoppers, Dunn said, are “looking for really fast fashion, for things that are hyper-relevant to what’s going on in fashion right now — and as inexpensive as possible.” Have you ever heard of Fashion Nova?
Payless is one of the original shoe stores. They have seemingly been around through every generation but that could come to an end soon. Payless was the tenth retailer to file for Chapter 11 bankruptcy protection in 2017 but they came out of that protection in August of 2017.
At the time of filing for bankruptcy, Payless had well over 4,400 stores in more than 30 countries. They have since closed 400 stores and counting. There is no exact way of knowing how much trouble they are in but the end could be around the corner.
RadioShack was once the go-to store for anything electronic. Sure, you could go to the electronics department at your local Wal-Mart or Target but there was no guarantee that they would have what you were looking for. RadioShack, on the other hand, was sure to have your electronic desires on hand.
They filed back in 2015 but then partnered with Sprint to open cell phone carrier shops. They ended up shutting down 200 stores in March 2017 and Sprint said they would turn a few hundred of the remaining locations into Sprint-only stores.
It seems like out of all the retailers involved in this outrage of store closures, women’s apparel is taking it the hardest. As it’s been stated previously, the need to go to the mall is just decreasing more every day. Charlotte Russe’s shoppers are younger, too, so you know they feel the effects heavy.
They dodged bankruptcy thanks to a debt restructure agreement from their loan lenders. CEO Jenny Ming said, “The willingness of our lenders to equitize a substantial portion of the Term Loan debt underscores their confidence in the Charlotte Russe team and their commitment to our strategic plan for profitability and future growth.” We’ll see what happens.
Now, where will consumers go to get the overpriced vitamins that they probably don’t need? Jokes aside, Vitamin World filed for Chapter 11 back in September 2017. They had plans to close 50 stores when they did this as part of the restructuring. The company has nearly 330 stores.
At first, it was “originally intended to proceed with a plan of reorganization . . . unforeseen operational challenges and liquidity concerns have caused the debtors to now pursue a sale of substantially all of their assets,” the retailer’s attorneys wrote in court documents.
When 2017 kicked off, Claire’s was on a lot of lists of companies projected to not make it out by the end of the year. They have got better since then with sales rising 0.8 percent in Q4. Their problem is that store is in a funky financial position.
“It’s mass destruction at American malls, and Claire’s is right in the middle of it,” said Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates. “Claire’s, which at one time was the most profitable chain in the business, has become a complete train wreck.”
Gymboree is where many people used to go to get cute clothes for their toddlers. “The steps we are taking today allow the Company to definitively address its debt and enable the management team to turn its full focus toward executing our key strategies, including our Product, Brand and Omni-channel initiatives,” CEO Daniel Griesemer said in a statement.
What this means is that they filed for bankruptcy in order to help save themselves. But if trends are true then this company might be in a world of trouble. Just look at Toys”R”Us. There is only so much time before things get grimmer for brick-and-mortar stores.