Megastores Filing For Bankruptcy: The Businesses That Might Not Exist In 2018

Megastore Bankruptcy bankrupt 2017 2018 Toshiba Westinghouse Sears

Amid news that Payless, The Limited, and BCBG went bankrupt in 2017, this year can be officially called the “bankruptcy year” for mega businesses that might not exist in 2018.

Megastores, including retail stores, are filing for bankruptcy at a record pace as their businesses fail to keep up with the rapid growth of e-Commerce online shopping in 2017.

In just over a little more than three months of 2017, as many as 14 retailers have declared bankruptcy, almost surpassing the total number of retailers that went bankrupt last year.

A recent analysis by S&P Global Market Intelligence shows that there are at least 10 more retailers that might not make it to 2018, with Sears Holdings Corp., Bon-Ton Stores Inc., and Perfumania Holdings Inc. among the highest risk of going bankrupt in 2017, according to Bloomberg.

While all segments have the probability of going bankrupt in 2017, including electronics, apparel, and automotive, department stores have been hit particularly hard.

U.S. retailers are going bankrupt at a record rate, as their businesses try to adapt to the rising popularity of online shopping. S&P lists 10 major retailers with no sight of improving their financial position in 2017 that could go bankrupt before 2018 rolls in, according to Time magazine.

Sears Holding Corp. tops the list with a whopping 23.84 percent chance of going bankrupt in 2017. DGSE Companies Inc., the Dallas gold and silver exchange, and Appliance Recycling Centers of America Inc. hold the No. 2 and No. 3 spots with the probability of default at 14.87 percent and 11.96 percent, respectively.

Sears suggested it could go bankrupt in 2017 when the company acknowledged last month that there is “substantial doubt” whether the business could make it to 2018.

In its 114-page study last year, Fitch correctly predicted Sears bankruptcy in 2017 along with retail chains such as Nine West Holdings, Claire’s Stores, and children’s clothing outlet Gymboree Corp., which is already having gloomy expectations about its future.

Last month, Bloomberg reported that Gymboree was preparing to file for bankruptcy in 2017 as the company faces a June 1 interest payment on its debt.

Spokespeople for Nine West, Bon-Ton, Perfumania, and Claire’s – the companies that have previously been named among the most probable bankrupts of 2017 – declined to comment on their financial well-being, fueling doubts about their existence in 2018.

Retailers are going bankrupt due to their financial struggles that stem from the rising pressure from online shopping in 2017. As consumers turn to e-Commerce at a record rate, quite a few megastores might not make it to 2018.

The study by S&P found that there are certain retail segments that have a more positive financial outlook for 2017 and 2018. These retail segments include discount shoe-sellers, outdoor goods shops, as well as consumer electronics. The food and home improvement segments have also proven immune.

The full list of S&P’s 10 major retailers that might not exist in 2018 also includes Bon-Ton Stores Inc., Bebe Stores Inc., Destination XL Group Inc., Perfumania Holdings Inc., Fenix Parts Inc., Tailored Brands Inc., and Sears Hometown and Outlet Stores Inc.

Interestingly, a few days before the report was publicly released, Bebe Stores Inc., which focuses on women’s clothing, had announced the closure of all of its 168 stores. While Bebe has yet to announce whether or not it would be selling clothes via e-Commerce, S&P predicts that the megastore might file for bankruptcy in the coming months of 2017.

In late March, Toshiba’s U.S. nuclear unit – Westinghouse Electric – filed for Chapter 11 bankruptcy protection, with the Japanese electronics giant admitting that Westinghouse’s liabilities totaled $9.8 billion in December.

This is officially the “bankruptcy year” in the U.S., while American consumers cannot help but wonder which businesses will go bankrupt next.

[Featured Image by Shizuo Kambayashi/AP Images]