Doomberg
I have been writing about the bloodbath in the US retail sector ever since 2016. At the time, the various big credit rating companies (S&P, Moody’s and Fitch) had released “retail deathwatch” lists. These lists detailed some of the weakest retail companies in the country, and for the most part the lists were accurate - many of the companies on those lists imploded in 2017 and 2018.
Some examples of major retailers falling apart were written about previously here, here, and here.
I’d hoped that with the bloodletting going on in the sector, we might see things finally start to settle down with a lot of the weakest players off the board. Unfortunately, that’s not what’s happening.
Moody’s Investor Service has released a brand new, updated retail “deathwatch” list with seventeen different retailers listed:
The fallout from the retail apocalypse is far from over.
Two months into 2019, four retailers have already filed for bankruptcy protection: Payless ShoeSource, Charlotte Russe, Gymboree, and FullBeauty Brands.
Ratings agencies are expecting more defaults in the coming months.
“As the US retail industry emerges from one of its worst multi-year default cycles yet, companies are getting ready for a second, though less virulent round among smaller, weaker names,” analysts for Moody’s Investors Service wrote in a report on Thursday.
The named companies are:
- PetSmart
- Neiman Marcus
- Academy Sports & Outdoors
- J.Crew
- Guitar Center
- The Fresh Market
- Value Village and Savers
- Save-a-Lot
- 99 Cents Only Stores
- Bluestem Brands (Fingerhut, Appleseed’s, Bedford Fair, Draper & Damon’s, Blair, Gettington)
- Fairway Markets
- David’s Bridal
- Tom’s Shoes
- Shoes for Crews
- Totes and Isotoner
- Pier 1 Imports
- BevMo (Beverages & More)
It seems like the pain in the retail sector is going to go on for some time as a mixture of bad management, too much debt, and Amazon dominating everything eats into these companies’ ability to keep their doors open.
It’s not ALL bad news, of course. In spite of the terrible environment, a few companies such as Wal Mart and Best Buy have managed to find ways to keep growing and compete against Amazon.
The retail bloodbath, though, is almost certainly a factor in the sluggish GDP numbers released yesterday.
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