16 Prominent Retailers at Risk of Closing in 2018

SEARS:

Sears Holdings, the parent company of Sears and Kmart, has been moving in reverse for years.

The iconic brick-and-mortar brands have survived primarily by selling off assets and borrowing money from CEO Edward Lampert's cash flows. But the company is running out of things to sell as it declared $8.1 billion in assets and $12 billion in liabilities at the close of Q2 in 2017.

More than 180 Sears and Kmart stores were closed last year, so the future for the mall staple and superstore companies does not look promising.

TOYS"R"US:

The once-popular toy giant filed for voluntary chapter 11 bankruptcy protection in September 2017, and announced January 24th its plan to close up to 182 stores. Following the filing, it secured $3.1 billion in bankruptcy financing from a group of lenders, which suggested it may bounce back from its mounting debt.

But the former ideal toy destination has failed to thrive in a market where products can be found cheaper online, and there is no real draw to shopping in store. Going forward, the retailed announced a plan to transform its stores into interactive destinations to attract kids and customers, but it is not clear whether it can survive in the competitive market.

NEIMAN MARCUS:

Neiman Marcus, a luxury department store chain known for selling bizarre, often overpriced apparel, sought to escape its mounting debt by putting itself up for sale in 2017, but later decided against the sell.

The retailer has reported at least seven consecutive quarters of declining comparable sales; it has cited reduced shopper loyalty and its lag time from the runway to store racks as reasons for the drop in profit.

DAVID'S BRIDAL:

David's Bridal has sold women's wedding apparel for more than 60 years, but the affordable retailer is being met by increasing competition by bridal boutiques in an already niche market.

The company planned to reduce promotional pricing following a slump in 2016, but Moody's analysts predicted in March 2017 that its efforts "may not be sufficient to de-lever the company towards a sustainable level."

The wedding apparel retailer may be on a short list for bankruptcy, but David's Bridal has no loan maturities due until 2019, which is often a tipping point for a filing.

CLAIRE'S:

The young women's accessories chain has been closing stores and losing money for years, leading many to believe it would not survive 2017.

As of Oct. 28, Claire's had cash and cash equivalents of only $25.8 million, down $5.4 million from the previous quarter. It also had $71 million drawn on its credit facility, leaving the chain vulnerable to a downturn in sales without a cash cushion.

J. CREW:

Chinos Intermediate Holdings, the parent company of the upscale preppy attire brand, has been struggling in recent years due to the lack of traffic in shopping malls.

In Q3 2017, the chain's overall sales fell 5%, while comparable-store sales dropped 9%. J.Crew also suffered a net loss of $161.6 million through the first nine months of 2017's fiscal year, up from $24.6 million from the previous year.

CHARLOTTE RUSSE:

Charlotte Russe is another mall-based brand that has suffered from the major decline in foot-traffic to stores. The company also catered to a younger demographic, which has been the most willing group to shift shopping to digital outlets.

The apparel retailers also own child-focused clothing brand Peek.

VITAMIN WORLD:

The health-based retail chain filed for chapter 11 bankruptcy in September 2017, then planned to close 124 of its 345 stores and sell the rest off to another company.

The chain had "originally intended to proceed with a plan of reorganization," but "unforeseen operational challenges and liquidity concerns have caused the debtors to now pursue a sale of substantially all of their assets," Vitamin World's attorneys wrote in a court document.

According to court papers, the company blamed its bankruptcy on "significant supply chain and ingredient availability disruptions" as well as "above-market rents and underperforming retail stores."

BI-LO:

Bi-Lo, the parent company of the Winn-Dixie grocery store chain, filed for bankruptcy in 2009. The company survived the filing but appears to be at major risk of succumbing to its debt again.

The chain, which employs about 41,000 people, has roughly $1 billion in debt and is in danger of default.

CHARMING CHARLIE:

Charming Charlie, a 14-year-old mall retailer aimed at selling accessories to young women, recently filed for voluntary chapter 11 bankruptcy. It plans to emerge from the filing and continue to run after closing roughly 100 stores.

"At Charming Charlie we are undertaking a comprehensive financial and operational restructuring to ensure that we can move forward with our previously announced Back-to-Basics strategy and continue to serve our loyal customers. For all of our customers, vendors and talented employees -- CharmingCharlie.Com and hundreds of Charming Charlie stores across the country are open for business and serving customers," the company wrote in a statement following the filing.

EDDIE BAUER:

Everest Holdings, the parent company of popular outdoor apparel brand Eddie Bauer, reportedly hired investment banks to explore strategic financial alternatives to a bankruptcy filing in June 2017, which included selling the company. It has already filed for bankruptcy once before, in 2009.

At the time, the company was not pursuing a debt restructuring, but it sought relief from a $225 million term loan due in 2020 and $200 million revolving credit line due in 2019.

NINE WEST:

Nine West closed many of its stores after it declared bankruptcy last year, and reports suggested that the remaining locations could follow behind in the coming months.

The company is privately heed so its financial information is limited, but the company has been closing stores as their leases expire, and it sold off its ownership of Easy Spirit footwear last year.

PAYLESS SHOESOURCE:

Payless's discount footwear chain's declining sales sought chapter 11 bankruptcy in April 2017, and following some store closures and budgeting, it emerged from bankruptcy protection in August. Under the protection, the business reportedly shut down 800 of its more than 4,400 stores in more than 30 countries.

Still, the company is one to watch for financial turmoil this year, as it continues to face the same challenges that initially forced it into bankruptcy. It will likely be forced to shut down more stores as the retail market moves away from buying at brick-and-mortar locations.

DESTINATION XL:

DXL claims its stake as the largest retailer of men's "big and tall" apparel, but the company is struggling to compete with the ease of online shopping.

In an earning release at the close of Q3 2017, CEO David Levin expressed a positive outlook on holiday profits, but they'll likely tumble back down in 2018.

"Our third quarter results reflect the difficult retail apparel environment that has persisted for most of 2017. ... Improvements in conversion and average transaction value allowed us to deliver essentially a flat comp for the quarter. On a positive note, store traffic has picked up considerably in the last two weeks of October and the first two weeks in November," he said.

GYMBOREE:

The longstanding children's apparel retailer filed for chapter 11 bankruptcy in June 2017 and announced it could close 375 to 450 locations. The filing, however, should reduce Gymboree's debts by more than $900 million.

James Mesterharm, Gymboree's chief restructuring officer, said in a court filing that the retailer was set back by lower-cost competition from rivals Children's Place and Gap, both of which have less debt financing.

PERFUMANIA:

The fragrance retailed filed for chapter 11 bankruptcy in August 2017 and planned to close 64 of its 226 stores in addition to a full company restructuring.

Perfumania said at the time that it planned to recapitalize, trimming its store count to "better align with current consumer shopping patterns," "increase investments in its e-commerce business," and to emerge as a privately held company.

Even after the retailer promised to jump into e-commerce and find a new market strategy, the company still has not completed the process and emerged from bankruptcy protection.