As the economy cycles down through fall, there is new, alarming data by professional services firm BDO USA LLP, first reported by The Wall Street Journal, that indicates retail bankruptcies continue to rise as store closures have already outpaced all of 2018.
BDO warned that the recent acceleration of the retail apocalypse was primarily due to last year’s weak holiday shopping season.
The rate of bankruptcy filings and store closures this year have jumped to crisis levels, expected to continue into 2020.
David Berliner, who leads business restructuring at BDO, said the trend is rather alarming but could slow into late 2019. “I don’t think the pace of the bankruptcy filings will be as large as it was in the first half,” he added.
BDO found many retailers are dealing with massive debt loads, over expansion due to cheap money, private equity-ownership pressures, and changing consumer behavior. It was the weak consumer in the 2018 shopping season that led to the acceleration of store closures in 2019.
Retail sales in 1H19 were lackluster, due to smaller tax refunds for consumers, trade war uncertainties and tariffs, and inclement weather, which forced many retailers to offer significant discounts, according to BDO.
A new BofA credit card report showed more evidence the economy continued to slow this summer.
BofA found that retail sales ex-autos fell 0.5% MoM in August, which reversed the 0.9% gain in July, and was not only the first monthly contraction since February this year, but was also the biggest monthly drop in 2019.
Aggregated credit card data for August showed 5 out of the 14 sectors increased, led by strength in cruises and airlines. But it was home goods stores, home improvement stores, sporting goods stores, furniture stores, department stores, and clothing stores that posted YoY losses.
In 1H19, 14 retailers with 25 or more stores filed for bankruptcy, including Payless ShoeSource Inc., Gymboree Group Inc., and Charlotte Russe Holdings Corp., BDO determined. That is up from 13 with 20 or more stores in 1H18.
In the last several months, Charming Charlie Holdings Inc., Barneys New York Inc., A’Gaci LLC, and Avenue Stores LLC have also filed for bankruptcy protection.
BDO said 19 retailers have already announced 7,000 store closures in 1H19 – has already exceeded all of 2018. Payless, Gymboree and Charlotte Russe accounted for at least 3,700 of those closings.
In an earlier report, we detailed how Coresight Research forecasted 12,000 stores would close in 2019.
“If the economy does stumble a little bit, things can get painful,” Berliner said.
“That can have a devastating effect on the weak retailers who can’t afford that sales dip in the holiday season.”
And with that being said, the consumer is unlikely to deliver a blockbuster holiday season for retailers this year. This would mean the retail apocalypse could continue into the 2020 election year, could have negative impacts for President Trump.
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In the end there will only be
WalmartChinamart.Perhaps helping the demise of many retail businesses is their constant rush to the left. I for one have never until the last couple of years thought about boycotting any business. That is until many of them started to kiss the lefts ass. I am now at the point of the following. Wall-mart go against the 2nd amendment. Done with them. Target Having a problem figuring out who should go in the appropriate bathrooms. Done with them. McDonald’s seemed to have become niggerized. Done with them. Burger King. Trying to sell imitation beef. Done with them. Dicks Sporting Goods,and Amazon Well they can just blow me. If this keep up I will be shopping no where.
I am a progressive and I was “triggered” yesterday when I drove past a La-Z-Boy showroom. Then, I was “triggered” again when I drove past a Home Depot because, of course, I’m homeless. And, yet again, I was “triggered” by an Office Max because I have no job. But the worse was when I got “triggered” by driving past a Dick’s Sporting Goods store because I have no dick and I am not a good sport.
Burger King turned into nigger food a long time ago.
Yeh, but it’s flame broiled and not fried, so it’s healthier for ya!
The reality is retail is massively overbuilt in the United States with more retail square footage per capita than any other country by a huge multiple. There are way too many retail stores – we could shed half and still have more retail square footage than any other country. Looking at the list of companies in bankruptcy, I haven’t done business with ANY of them in at least decade (FTD) and no business ever with the rest.
Most of the stores on the list carried shoddy products at prices too high for the quality of merchandise. Then, they catered to what market? Teenagers? Plus, 98 per cent copied what the other store carried, same-o, same-o. I could go to a thrift store and see walls of the shabby goods that were once sold in the closing stores. No great loss except for the employees.
Eventually, people come to TRUST on line retailers.
I’ll now buy new bikes and skis on line.
New oven , washer and dryer, couches and chairs also.
I only shop at habitat and thrift stores.
Marketwatch is saying there is nothing to see here, move on, just a retail restructuring, a strategy, a repositioning, a turnaround, a hiccup, a…….
If it walks like a duck and quacks like a duck, call it a duck.
It’s obvious: A huge department store spends lots of money on rent / mortgage, amenities, fancy displays, sales clerks, taxes, etc. When you buy something at a fancy story – you are paying for all that overhead. Plus you have to waste your time driving there and 55 cents a mile for wear and tear on your car.
Now an online store: Simple warehouse, no clerks, no cash registers, all transactions by credit card. Most offer low cost / no cost shipping. They pass these savings on to the customer. Buy stuff any time day or night.
To me the best part of buying online is that they usually have the advertised sizes. I can’t tell you how many times I’ve gone to a department store – and find they have no medium shirts / sweaters / etc. I’ve said to the clerk – all these shirts are XL – where are the mediums? The answer is “This is what we have.” Fuck them.
You can easily return merchandise to a department store. Try returning a
riding lawn mower to an online store. Not so easy.
Online shopping has not been enjoyable to me, unless there’s a physical store nearby, such as bestbuy.com.
Not to my experience. Even big and heavy stuff.
Most reputable on line merchants have a no-questions-asked with a cheerful refund policy and that is just the way I like it especially when USPS, UPS or FedEx will even pick the return up at the house.
Exactly what I tell people all the time when shopping for underwear. No mediums.
They just dont get the bell curve.
Tell me when if affects spending.
FTD? What’s next, Whitman’s Chocolates?
I haven’t seen or heard of an FTD since high school. And how does a place that sells flowers go $150,000,000.00 in debt?
Wouldn’t it be wonderful to wake up one morning and see a similar listing in the newspaper or online, of all the government agencies shutting their doors this year?