As pandemic stretches on, retail bankruptcies approach highest number in a decade

As the coronavirus pandemic casts a long shadow over the U.S. economy, retail bankruptcies are approaching their highest number in a decade.

Le Tote, owner of Lord & Taylor, and Tailored Brands, parent company of Men’s Wearhouse, filed for bankruptcy Sunday. They’re the latest retailers pushed to the brink by the pandemic.

The additions bring the total retail bankruptcy filings so far this year to 43, according to tracking by S&P Global Market Intelligence.

With five months left in the year, there have already been more retail bankruptcies this year than in the past eight years, according to S&P Global. There were 48 filings by retailers in 2010, according to S&P Global, following tremendous tumult and financial strain across the industry during the Great Recession.

In 2008, 441 retailers filed for bankruptcy, according to S&P Global.

The pandemic has compounded challenges that some retailers faced even before Covid-19 began to spread across the country. Some, such as Lord & Taylor and J.C. Penney, were having trouble reaching new customers as e-commerce brands won more of young shoppers’ attention and dollars. Others, like Neiman Marcus, were saddled with debt.

Jan Kniffen, a retail consultant and former executive at The May Department Stores, which was eventually folded into Macy’s, said for many of the retailers, the pandemic only sped up their likely appearance in bankruptcy court.

Yet the coronavirus pandemic quickly pushed them over the edge. Shelter-in-place orders temporarily shuttered stores for weeks. Americans’ spending habits changed, as people coped with pay cuts and job losses or had less of an appetite for new clothing because of working from home and attending few social gatherings.

The pandemic could also weaken a typically busy shopping season for apparel retailers: back-to-school. Families’ shopping lists could be shorter or have different kinds of items, such as laptops and headphones, as school districts plan for staggered schedules or remote learning. 

More bankruptcy filings are expected. The coming months will also reveal which of the bankrupt companies will find a way to survive through new ownership or restructuring — and which ones will be forced to permanently close stores and liquidate inventory.

Kniffen said other retailers are at risk, including women’s apparel stores J.Jill, Chico’s and Francesca’s and experiential toy retailer Build-A-Bear.

“If you’re heavily indebted, if you’re mall-based, if you’re selling something people aren’t buying now because of Covid and if you’re not an essential retailer, you’re at risk,” he said.

Here are some of the biggest retail bankruptcies so far this year, in order by the date of filing. 

The home goods chain Pier 1 Imports filed for Chapter 11 bankruptcy protection on Feb. 17, listing $340.6 million in liabilities. 

Its plans to find a buyer were unsuccessful, as the pandemic hit, ultimately pushing Pier 1 into a total liquidation. Pier 1 is, meanwhile, planning to sell its intellectual property and other online assets to a firm known as Retail Ecommerce Ventures, for $31 million, according to court documents. 

The home goods chain filed for bankruptcy on March 8, listing liabilities in a range of $100 million to $500 million. 

It planned to close most of its roughly 190 stores, but going-out-of-business sales were stalled because of the pandemic. Those sales have since been able to restart at select locations. Some Art Van stores are being replaced with a company known as Levin Furniture. 

The sporting goods chain Modell’s filed for Chapter 11 bankruptcy protection on March 11, listing liabilities of between $1 million and $10 million. At the time, it said it planned to shut all of its roughly 140 remaining stores for good, as the retailer was increasingly conceding sales to Amazon and suffered a poor 2019 holiday season. 

The coronavirus pandemic, however, upended Modell’s going-out-of-business sales, with retailers deemed nonessential forced to shut down for a period of time to try to help curb the spread of the virus. Modell’s was later able to resume liquidation over the summer. 

The denim brand True Religion filed for bankruptcy on April 13, listing liabilities of between $100 million and $500 million. This was notably its second time doing so in under three years. 

However, the company is expecting to emerge from bankruptcy later this year, according to court documents, having amassed roughly $138.5 million in secured debt and another $44 million that was owed to unsecured creditors. When it filed, True Religion said it would have preferred to wait out the pandemic and stay-at-home orders, but “simply could not afford to do so.” 

The upscale department store chain Neiman Marcus filed for bankruptcy on May 7, listing liabilities of more than $1 billion. 

Neiman will close its recently opened store at the Hudson Yards mall in New York City. It is also shutting two stores in Florida and one in Washington. A hearing to approve Neiman’s business plan to emerge from bankruptcy has been pushed back, as some of the retailer’s lower-ranking creditors have raised issue over an asset transfer in 2018. When the company filed for bankruptcy, it had a little more than 40 department store locations in the U.S. 

The health chain GNC Holdings filed for bankruptcy on June 23, listing liabilities of more than $1 billion. 

At the time, it said it planned to shut as many as 1,200 of its 5,200 U.S. stores, as it searched for a buyer. The company is hoping to either sell itself or emerge from bankruptcy later this year. In its bankruptcy filing, GNC said the pandemic only accelerated the “financial pressure for the past several years.” 

The denim maker Lucky Brand filed for bankruptcy on July 3, listing liabilities of between $100 million and $500 million. 

With more than 200 stores in shopping malls across the country, the company has so far said it plans to close 13 locations permanently, but more could be on the way. A venture known as Sparc Group, which is comprised of mall owner Simon Property Group and the licensing firm Authentic Brands Group, has been named the stalking horse bidder, offering $140.1 million in cash and $51.5 million in credit to buy the company’s assets. The deal is still subject to court approval. 

The kitchen accessories retailer Sur la Table filed for Chapter 11 bankruptcy on July 8, listing liabilities of between $50 million and $100 million. 

At the time of the filing, the company said it had already started liquidating 51 of its 121 U.S. stores. It was hurt especially by not being able to hold its in-person cooking classes, which it is most well known for, during the pandemic. 

The men’s apparel maker Brooks Brothers filed for bankruptcy on July 8, listing liabilities of between $500 million and $1 billion. 

A stalking horse bid by Sparc (Simon Property Group and Authentic Brands Group) for $305 million is looking to salvage at least 125 stores. WHP Global, a rival to ABG, is also preparing a bid for Brooks Brothers, the company told CNBC. Simon, which is the biggest U.S. mall owner by the number it operates, had already teamed up with ABG to supply a zero interest, $80 million loan to carry Brooks Brothers through its restructuring, as the retailer searched for a buyer. The company has several court hearings this month to discuss possible offers. 

New York & Co. parent RTW Retailwinds filed for bankruptcy on July 13, listing liabilities of between $100 million and $500 million, with 378 retail and outlet stores. 

The retailer said it plans to permanently close most, if not all, of its locations. It is also still evaluating potentially selling its e-commerce operations and related intellectual property in bankruptcy proceedings. 

The parent company of Ann Taylor and Loft, Ascena Retail Group, filed for Chapter 11 bankruptcy protection on July 23, listing more than $1 billion in liabilities. It had 2,800 stores across the U.S., Canada and Puerto Rico, as of the filing. 

Moving forward and hoping to get back to profitability, it said it plans to permanently close a “significant” number of Justice stores, along with certain Ann Taylor, Loft, Lane Bryant and Lou & Grey stores during its restructuring. It is closing all of its plus-size Catherines stores. A final number of store closings will be determined based on “the ability of Ascena and its landlords to reach agreement on sustainable lease structures,” it said. 

The fashion rental start-up and owner of department store Lord & Taylor filed for bankruptcy on Sunday. It listed that it has between $100 million and $500 million in estimated liabilities.

Le Tote looked to move beyond its core business, a subscription service for women’s clothing that’s similar to Rent the Runway, with the acquisition of Lord & Taylor last year. But that bold move became even more challenging as the coronavirus pandemic shut stores and weakened the demand for apparel for work and special occasions.  

Before the acqusition by Le Tote, Lord & Taylor was owned by Hudson’s Bay Co. It began as a dry goods store in 1826, and operated about three dozen stores across the country. Its iconic building on New York’s Fifth Avenue closed last year after more than a century.

On its website, Lord & Taylor said that it’s looking for a new owner, but will continue to sell merchandise online and in stores.

Tailored Brands, the owner of well-known clothing brands like Men’s Wearhouse and Jos. A. Bank, saw demand for men’s suits vanish as workers stayed at home and special events were canceled during the pandemic. The company, which filed for bankruptcy Sunday, also owns K&G Fashion Superstore and Moores Clothing for Men.

In recent weeks, the retailer skipped a $6.1 million payment to bondholders and announced layoffs as it tried to stay afloat. In late July, it said it would cut about 20% of its corporate workforce by the end of its fiscal second quarter and close up to 500 stores. It did not disclose the timetable for closures or the locations.

Tailored Brands had 1,450 stores in the U.S., as of Feb. 1. In a release, it said it will reduce the company’s funded debt by at least $630 million through restructuring. Jack Calandra, CFO of Tailored Brands, left the company on July 31.

— CNBC’s Nate Rattner contributed to this data visualization.