Bankruptcy could be looming for some retailers

A second wave of Covid-19 may be detrimental for retailers who are still recovering from the onset of the pandemic.

Some of America’s biggest names in fashion filed for Chapter 11 this year, including J. Crew and Neiman Marcus, J.C. Penney, Tailored Brands, Fred’s, Sears and Nine West.

According to Retail Dive, the “bloodletting” is far from over. “Bankruptcies have largely slowed as the industry heads into the holiday season. But depending how the holidays shake out, 2021 could bring another wave.

Meanwhile, consumers continue to shift their shopping habits as the pandemic wears on. Foot traffic is still depressed in many sectors, especially mall-based retail. Supply chains have gone through tremendous financial stress along with retail. More consumers have been shopping online than ever.”

Companies that remain on the watch list include Victoria Secret owner L Brands, Xpress, J. Jill, Francesca’s, Apex Global Brands, Vince and DSW.

According to data provided by CreditRiskMonitor, 17 companies are at heightened risk of filing for bankruptcy in the next 12 months. As of Sept. 29, eight retail companies had a high risk score, with an estimated 10 percent to 50 percent chance of filing for bankruptcy.

Retailers around the world, but particularly in the United States, have been muddling through major shifts in the retail landscape, says CreditRiskMonitor. Although most have struggled, those with heavy debt loads face greater challenges. Prior to Covid-19 it looked as if companies could work through the e-commerce transition, however, with shuttered stores dragging down sales, time is running out for some.

Image via Lord & Taylor