The retail industry was not in great shape when the coronavirus pandemic started, and now the economic collapse is putting some stores in danger of closing permanently. Several big chains have already filed for bankruptcy, with some expecting to shut down altogether in the coming months. With some store expected to remain non-essential for the duration of the COVID-19 crisis, at least 12 big retailers are heading on out for good.
Retail chains of all kinds have been making dire announcements in recent weeks — from furloughs and layoffs to store closings to bankruptcy filings. In most cases, the stores were already struggling before the coronavirus outbreak reached the United States in March. Now more than ever, retailers cannot compete with online shopping, since it is safer and is still allowed under stay-at-home orders. Other in-person businesses that rely on public spaces are in trouble as well, from restaurants to recreational facilities.
The time line for the end of the coronavirus pandemic is slowly becoming more clear, but it is not instilling hope in the retail industry. Last week, Dr. Anthony Fauci, the director of the National Institute of Allergy & Infectious Diseases, testified before the Senate that he hoped to know "in the late fall, and early winter" whether the vaccines currently in development are effective, according to a report by CNBC. Still, mass production, distribution and administration of the vaccine requires time.
Even at that point, the retail industry is far from safe. Many pundits have said that the coronavirus pandemic is likely to be a culture-shifting event in the long-term. It could be months or years after the advent of a vaccine before people truly return to "normal" behavior in public spaces, if ever.
With all that in mind, it's no wonder that things look grim for the biggest retail chains in the country — especially those that do not offer essential products or services. Here's a break down of which stores are closing for good.
JCPenney is closing at least 250 stores as it considers filing for bankruptcy protection, the company announced last week. It will close 200 stores by the end of 2020, and at least 50 more next year, finding stability with just over 600 stores by the time the pandemic comes to an end.
JCPenney also announced its intention to make a filing with the U.S. Bankruptcy Court in the hopes of keeping what operations it can going during this time, while also paying non-furloughed employees' throughout the "financial restructuring process."
J. Crew filed for Chapter 11 bankruptcy back on May 4, with permanent store closures being a possibility. At the time, the company admitted it is struggling with debt, not least of all because it rents all of its stores, but it has hired a real estate consultancy and liquidator to help evaluate its various leases in a search for financial relief.
That same week, Neiman Marcus filed for Chapter 11 bankruptcy protection on May 7. The company said that right now, it is not planning on "mass store closings," and that the filing "will not impact the timing of our store re-openings, but it will ensure we are stronger financially when we do. If there were to be future store closings it would be an operational decision on a case by case basis."
According to a report by CBS News, Forever 21 filed for Chapter 11 bankruptcy back in September, with plans to close as many as 178 out of its 800 stores. Since then, the coronavirus pandemic has done it no favors, with all of its stores temporarily closed until further notice. The assets of Forever 21 were finally sold in February, and so far there is no word on how many stores will be re-opened when they are allowed to again.
Sears & KMart
Between the two of them, Sears and KMart has closed over 3,500 stores and cut about 250,000 jobs in the last 15 years, according to a report by USA Today. The company is one of the most emblematic examples of the crumbling retail industry, having filed for Chapter 11 bankruptcy in 2018. When the coronavirus pandemic hit, only 182 Sears and KMart stores were left, and it is not clear how many will re-open.
Jo-Ann Stores were struggling not just because of the decline of retail, but because of President Donald Trump's trade war with China before the coronavirus hit. With most stores temporarily closed, things look bleak. While there haven't been any formal announcements from the company yet, S&P's Wyeth: "We believe Jo-Ann will run into liquidity problems within the next 12 months."
Steak n Shake
Steak 'n Shake was approaching a make-or-break financial deadline in 2021, and with the disruption of the coronavirus pandemic, it is not clear how they will make it in light of 57 closures across the U.S. According to a report by USA Today, S&P now rates the company as "a significant risk to default further on its debts." However, so far Steak 'n Shake has not announced plans for mass closures, layoffs or bankruptcy.
David's Bridal has already survived Chapter 11 bankruptcy once, but it did not have much time to get back on its feet after January of 2019. Of all the in-person services that will take a while to recover, weddings may be one of the longest, as people might not want to shell out for extravagant weddings and gather all their friends and family together even after the coronavirus pandemic is in hand.
Ascena Retail Group
The Ascena Retail Group accounts for a number of franchises and department stores like Lane Bryant, Justice, Loft and Ann Taylor. They are all in trouble, as Ascena itself announced it was closing 62 percent of its stores in the apparel sector back in 2019, according to the Coresight Research global marketing research firm. Some of those closures were not finished yet when the coronavirus pandemic hit, and the already declining foot traffic in shopping malls is not expected to pick up any time soon.
GNC Holdings had announced the closures of at least 304 stores this year before the coronavirus pandemic hit, according to Coresight Research. Things got even worse in March, when S&P Global Ratings lowered the nutrition company's credit rating even further.
"We believe conditions for GNC are deteriorating substantially due to the coronavirus pandemic, the anticipated macroeconomic downturn and the limited access to capital markets," read the S&P report.
Pier 1 Imports0comments
Finally, Pier 1 Imports announced that it is shutting down all of its stores for good on Tuesday. The company issued a statement, asking the U.S. Bankruptcy Court to facilitate "an orderly wind-down" to its business as it liquidates its remaining inventory and other assets. Pier 1 had been struggling for years, with hundreds of stores already closing, and the coronavirus was the final straw.
"This decision follows months of working to identify a buyer who would continue to operate our business going forward," CEO Robert Riesbeck said in a public statement. "Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down."