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More than a dozen retailers — including major department store chains, mattress sellers and shoe companies — filed for bankruptcy protection in 2018, despite strong consumer spending that otherwise lifted the U.S. economy.
The pace of closures slowed from 2017, when more than 20 retailers including Toys R Us, Hhgregg and Gymboree went bust. But the filings and resulting store closures are still painful for the employees and mall owners who find themselves dealing with the aftermath.
The biggest bankruptcy of 2018 was Sears, a 125-year-old business that was once the largest retailer in the U.S. The department store chain struggled to revive its business as it shut hundreds of stores and sold other assets in an attempt to raise cash. Sears' fate is still uncertain heading into 2019, as the company's chairman, Eddie Lampert, is in the process of trying to buy back Sears' remaining stores and prevent them from going dark altogether. Sears employed roughly 70,000 people in the U.S. when it went bust in October.
For other businesses on the brink of bankruptcy, Sears offers a painful lesson of what can happen to a company when it fails to invest in its stores and website to keep pace with the rest of the industry. Companies like Walmart and Target doubled down on investments in their brick-and-mortar shops and e-commerce operations in 2018 — remodeling stores and adding faster shipping options. They're expected to have had a strong holiday season as a result.
A list compiled by Moody's shows retailers at risk of defaulting on loan payments — and therefore who could be forced to file for bankruptcy in the new year — include J.Crew, Neiman Marcus and Toms Shoes. Analysts will be watching these names more closely, in addition to J.C. Penney, which last week saw its shares fall under $1 for the first time. Below is a list of more than a dozen retailers that filed for bankruptcy in 2018.
David's Bridal filed for Chapter 11 bankruptcy protection last month, promising at the time that it would keep all of its stores open during the restructuring process. The wedding dress retailer was grappling with a heavy debt load amid changing consumer tastes in the industry. With more millennials marrying later and opting for nontraditional dresses, David's Bridal has struggled to evolve and build out a stronger online presence. In bankruptcy, the company reached a deal with lenders to reduce its debt by more than $400 million.
The parent company of Sears and Kmart stores filed for bankruptcy on Oct. 15 after years of trying to stay alive through financial maneuvering and shuttering hundreds of stores. The company's chairman, Eddie Lampert, who's given Sears billions of dollars through the years to keep it afloat, has since stepped down from his CEO position but is still trying to revive the department store operator. Most recently, Lampert submitted a $4.4 billion bid via his hedge fund, ESL Investments, to try to save some 400 Sears and Kmart stores from going dark. The company could still face liquidation if the bankruptcy court, which needs to approve the sale, rejects Lampert's bid.
Mattress Firm, the largest mattress retailer in the U.S., filed for Chapter 11 bankruptcy protection in October. The company quickly shut roughly 900 of its 3,500 stores across the U.S. before emerging from bankruptcy in mid-November. It said it focused on closing those locations where it had another store nearby in the same market. It also managed to obtain $525 million of financing to fund its future growth. Mattress Firm has struggled as start-ups like Casper, Tuft & Needle and Purple have actively targeted millennials shopping for mattresses today.
National Stores — a discount retailer started in Los Angeles that owns the Fallas, Conway and Anna's Linens brands — filed for Chapter 11 bankruptcy protection in August. The company said it plans to shutter 74 of its more than 340 stores across the U.S. and Puerto Rico. Analysts say National Stores took on too much debt, which ultimately dragged the overall business down. Many of its locations today are situated in open-air or stand-alone shopping centers.
Gump's Holdings, a San Francisco-based department store operator, filed for Chapter 11 bankruptcy protection in August, after it wasn't able to find a buyer or financing to keep it afloat. The company said in a press release that an "overwhelmingly difficult retail environment" brought many obstacles to its business. In addition to its flagship store in San Francisco, Gump's has a catalog and runs its own website. The retailer is still searching for a buyer, but it's already brought in liquidators to get rid of some merchandise and repay creditors.
Brookstone filed for Chapter 11 bankruptcy protection in August. The retailer, known for selling massage chairs and other tech gadgets and giftable items, is planning to shutter its 101 locations in U.S. shopping malls as a result. Brookstone is currently searching for a buyer for its airport locations, along with its e-commerce business and wholesale operations. Those will remain running during the scouting process.
Shoe company Rockport Group filed for Chapter 11 bankruptcy protection in May, following similar moves by peers in the shoe industry like Nine West and Payless. Rockport agreed to sell itself to private equity group Charlesbank Capital Partners in a deal that closed in July. As part of the sale, Charlesbank took over Rockport's wholesale business. The Rockport brand is sold by retailers in more than 60 countries. Charlesbank meanwhile has stakes in other businesses like The Princeton Review, Shoppers Drug Mart and Papa Murphy's Take 'N' Bake Pizza stores.
Footwear and apparel company Nine West filed for bankruptcy in April, announcing at the time that it planned to sell some of its brands to Authentic Brands Group and shutter all 70 of its brick-and-mortar shops. The bankrupt retailer has since asked investment bank Lazard to help it explore a sale of its remaining assets, which include its jeans and jewelry businesses, along with the Anne Klein and Kasper brands, Reuters reported in July. Nine West has been hurt as some of its retail partners — chiefly department store chains — shutter stores or go bankrupt altogether.
Accessories chain Claire's filed for Chapter 11 bankruptcy protection in March, with the goal of trimming its debt by nearly $2 billion. The mall-based retailer — owned by private equity firm Apollo Global Management — struggled with a steep debt load it was unable to maintain as purchases increasingly shifted online and its sales declined. Claire's continued to run its roughly 1,600 Claire's and Icing-branded shops across the U.S. during the restructuring process, and it later emerged form bankruptcy in mid-October. The retailer said it had $575 million of capital to help it through the holidays.
The Walking Company filed for Chapter 11 bankruptcy protection in March, making it the second time the company did so within the span of a decade. It announced in June that it successfully reorganized its debt and emerged from the process. The company has almost 200 stores, primarily in shopping malls, across the U.S. It also owns Abeo, a type of shoe that can be customized to match the shape of a customer's foot.
Department store chain Bon-Ton filed for Chapter 11 bankruptcy protection in February, with the goal at the time of selling the business while it trimmed some of its real estate portfolio. Ultimately, the retailer was forced into liquidation when a bid by mall owners fell through. It is currently in the process of shuttering its more than 200 locations across the U.S. within shopping malls. Other brands owned by Bon-Ton include Carson's, Younkers and Elder-Beerman.
Kiko USA, a cosmetics company and subsidiary of Kiko Milano, filed for Chapter 11 bankruptcy protection in mid-January with plans to restructure the business by closing almost all of its stores. It had nearly 30 locations in the U.S. at the time, many within shopping malls. The beauty brand has said its international business is still strong and growing. In America, Kiko struggled to negotiate with landlords over lower rents or terminating leases early.
Women's apparel retailer A'gaci filed for Chapter 11 bankruptcy protection in January. At the time, the company said it would talk to real estate owners to try to negotiate deals on 49 of its 76 stores. The company said in a press release that roughly two-thirds of its lease costs were "unfavorably high." Following those discussions, earlier this summer, A'gaci announced it would keep 55 stores open as it emerged from Chapter 11. The company said it still has 1,500 employees.