We live in deeply uncertain economic times. It's been a hard few years for the global economy with recessions, countries going bankrupt, major banks disappearing off the map and surprises around every corner. Even now, stock markets and traders are watching nervously to see how Brexit impacts markets across the world.
With banks unwilling to lend and lines of credit harder to find than ever, more and more well-known businesses are suddenly finding themselves under pressure. Household names that have featured on the storefronts of our main streets for decades face the sudden and unexpected threat of bankruptcy and extinction.
In some cases, their struggles have been played out publicly, with their ultimate salvation or failure happening under the gaze of the public. In others, you never had any idea there was a problem at all. Here are thirty companies who've stared bankruptcy in the face, and you never even knew about it!
1. J Crew
Once the 'go to' choice by many of the great and good, including former First Lady of the United States Michelle Obama, J Crew hasn't found fortune smiling on it quite so much in more recent times. It's been in the process of closing down outlets for some years now, with sales figures in free-fall. J Crew's bridal store was axed entirely as the company tried to balance the books.
Heads had to roll at the top of the company, too. Out of the door went Jenna Lyons, the company's former creative director, and CEO Mickey Drexler. Drexler was candid when asked about the start of the company's issues; he felt a decision to raise prices in order to fund expansion had been both wrong and poorly timed. A debt exchange in June 2018 allowed J Crew to restructure $2bn of its deficit, and the embattled company fights on.
2. Sears Holdings
At the turn of the century, the idea of Sears getting into financial difficulty would have been laughed at as being absurd. They were too integral to the high street, and simply too big to fail. Unfortunately for them, times have moved on, and Sears reacted too slowly. They spent years dancing around the sinkhole, trying everything to survive including closing stores, laying off significant numbers of staff, selling assets and cutting costs wherever possible None of it has worked.
In October 2018, Sears filed for Chapter 11 bankruptcy, closing a further142 stores in the process of doing so. Sears CEO Eddie Lampert took the extraordinary step of lending the company several hundred million dollars from his own hedge fund to keep the company afloat and avoid bankruptcy being finalized, but the overall prognosis is a grim one.
3. 99 Cents Only
The problem with being a store that sells discount goods is that you have to sell five times as many products as anyone else to plug the hole when times are hard. Discount and bargain stores like 99 Cents Only were once popular choices for individuals and families working to a budget, but the introduction of budget lines within mainstream high street stores has reduced the need for their existence. Walmart, in particular, has been taking more of their market share with every passing year.
Behind the scenes, 99 Cents Only has been struggling to stay alive for years, and after 35 years may have exceeded its natural lifespan. Recent overall owners of the company have included Canada Pension Plan, Ares Management, and even an unnamed private family. New CEO Jack Sinclair says the company has begun to turn a profit, but after losing over $70m in 2017 alone, it still has a mountain to climb.
We live in an era where everyone seems to take a tablet for something. Whether that's because you've been prescribed medication, or just because you feel like magnesium, cod liver oil, multivitamins or folic acid 'do something for you', more people use supplements now than at any previous point in history. You'd have thought that would be good news for supplement providers, but apparently not.
GNC's fortunes have been very much up and down for the past couple of years. It's currently carrying $1.3bn in corporate debt, and not creating enough profit to service that debt properly. In February 2018 they announced what they hope to be a permanent solution; the sale of a 40% stake in the company to Chinese investors, who will then use that 40% share to create and sell products to the Chinese market. Whether they've given away too much in the attempt to stay alive remains to be seen.
5. Fred's Pharmacy
GNC isn't the only pharmaceutical company to suffer from recent economic woes; the once-dependable Fred's Pharmacy has been looking a little ill themselves. For seventy years Fred's has served successive generations of Americans, but unless dramatic steps are taken soon, the company will not be there for the generation who comes next.
By May 2018, Fred's was experiencing a steady and constant downturn in sales, having dropped off 4.3% in the prior twelve months, with a net loss to the company of $139m. Instead of shrinking away, Fred's tried to expand by adding another 400 stores to its empire but found itself squeezed out by Walgreens. With nowhere left to turn but its own assets, Fred's sold off specialty pharmacy CVS for $40m, and when that didn't achieve the desired effect, the entire company was put up for sale.
6. Destination Maternity
Some things in life are constant; birth, death and taxes. They say funeral workers will never be out of a job because there will never be a drop in demand. The same should be true of those who work in birth and maternity, but the senior staff of Destination Maternity have a different tale to tell.
As of right now, the huge company isn't outwardly showing signs of the trouble it's in. Its 1000-plus stores are still open, and staff are still being paid. Behind the scenes, sales are down seven percent, and the previous CEO walked out last year. The severed relationship between Destination Maternity and Kohl's is generally thought to be the source of the problem. What's less certain is the course of action that can be taken to solve the issue. There's been an upturn in e-commerce since the Berkeley Research Group was brought in to help the company focus on its audience, but what that means for the physical stores is yet to be seen.
7. Ascena Retail
You may not be familiar with the name 'Ascena Retail', but you will know the brands they represent. They're the umbrella company who are ultimately responsible for Ann Taylor, LOFT, Dress Barn and Lou & Grey, among others. When things are going well, owning several major firms is an excellent position to be in. When one of those brands starts to struggle it can drag on the finances of the others, and before you know it there's a major issue. In this case, Dress Barn is the bad apple, with 25% of all its stores due to close during 2019.
Ascena received $1.7bn in sales revenue during 2017 which sounds like a lot but actually represents a drop compared to the previous year, which was a drop from the year before that. The trend is downward, and action obviously has to be taken. It's expected that closing down the ineffective Dress Barn stores will steady the ship, so here's hoping.
8. Stein Mart
It's no secret that Stein Mart hasn't had the best of times in recent years; sales have been sliding downhill for a while as competition for discount goods become ever fiercer. As a basic rule, the lower Walmart and stores like it go with the prices for their own goods, the less room there is for a company like Stein Mart to turn a profit.
There were times when it looked like Stein Mart's days might be numbered, but the appointment of new business strategists at the beginning of 2018 seems to have saved them, followed up by the acquisition of $50m worth of loans in March to ease the short-term financial pressure. Digital sales are increasing dramatically as the company shifts its focus to internet-based trade. Stein Mart still posted a loss of $23.4m overall, but that's dramatically lower than was anticipated. The firm should survive.
9. JC Penney
Much like Sears, JC Penney was once considered to be an all-weather brand, capable of surviving the very worst economic conditions. That isn't how things have turned out for them. Even though they still have large and glamorous stores open in multiple locations, the signs of fade are everywhere within the firm. During 2018, one thousand employees were laid off, and a major distribution center was closed down to save money.
The company is currently saddled with a total debt of $4.2bn, making its $116m income last year a drop in the ocean compared to what has to be paid off. The company has a lot of investors, some of whom are keener to see a speedy return on their investment than others, and there are signs of impatience at boardroom level. Chairman Marvin Ellison walked away in May 2018, and there's no sign his replacement has a handle on the situation. The day may soon come where this Penney drops.
10. Office Depot
The internet has had a dramatic effect on the fortunes of many stalwart companies. Once upon a time if you needed a few bits and pieces for the office, you went straight to Office Depot, and the problem was solved. Now there are hundreds of companies online offering the same products, many of whom offer them at lower prices. Sales at Office Depot dropped off a cliff in 2017, falling by 7%.
The future may be a little brighter though. The company has changed its strategy and gone from just selling products to also selling services. It now operates a subscription program called 'BizBox' and has stumped up cash to acquire CompuCom to help provide the services offered through the program. 14% of the company's sales in 2018 were for the new service division, and that figure should creep upwards. Unless there's a sudden and sharp shock in the market, Office Depot should be safe now.
11. Vitamin Shoppe
It's bad news across the sector for vitamin and supplement stores; even names as established as Vitamin Shoppe are feeling the pinch. Sales have been trending downwards, with an 8.5 plunge in 2017 bringing the company's top line down to around $1.2bn. Again, that sounds like a lot to the average person, but the worth of that money to a company depends on how much debt it has, and what its operating costs are.
Vitamin Shoppe is down, but not out. Management at the firm has decided that malls are just less popular than they used to be and trying to coax people back down the conventional routes won't work. Instead, they're looking at expanding the services they offer online to include delivery, diversifying the range of products they offer and getting involved in live events. Whether any of these strategies will pay off remains to be seen, but they still have time to try.
12. Neiman Marcus
Whenever you see a big business come out with a line or strategy along the lines of 'digital first' or 'priority online', as Neiman Marcus have done, what they're really telling you is 'we're going to start moving our business online because the high street isn't working out anymore'. There are persistent rumors that this luxury clothing store is on the brink of collapse, and that hundreds of staff may be cut loose any day now as they try to balance the books. Sales fell 5% during 2017, and interest payments on their debts are chewing into those takings.
At one point, Neiman Marcus entered into discussions with Hudson's Bay about a takeover, but the Canadian firm backed out when they saw the books, which showed a sharp and constant downward turn in Neiman Marcus' sales. Is there another company out there who can step in and save them?
The tale behind fashion retailer Bebe's woes is an interesting one. Although they've suffered from the declining high street trade just as all of their competitors have, they've also been dealing with a unique set of circumstances behind the scenes. The original creative director at Bebe was Neda Mashouf, wife of founder Manny Mashouf. When they divorced in 2007, she left, and the look and feel of the brand have never been the same since. The situation is now critical; they recorded a loss of $4.6m in 2017.
Bebe has taken dramatic steps to stay alive as a brand; they've decided to close all of their physical outlets and trade online only. It's cost them $65m to end contracts early and shutter their stores, which can't have helped the financial picture in the short term. Presumably, someone clever has costed things up, and worked out there's a long-term gain to doing so.
14. Pier 1 Imports
Things were hard enough for Pier 1 at the start of 2018. With sales dropping at an alarming rate of 9.2% year on year within the first quarter, the company was in panic mode. They hired Jeffries in to consult on business strategy and were told there were issued needing investment or attention within its sourcing, merchandising, marketing, pricing, ops, e-commerce, store and supply chain. Call us cynical, but that sounds like the whole of the business. And then the President made things worse!
Well over half of Pier 1's goods are manufactured in China. When President Trump levied a 10% trade tariff against China, it hit Pier 1 directly in the pocket; a blow they couldn't really afford to take. In the aftermath of the decision, Pier 1's credit status was downgraded, making it harder for them to refinance existing debt or take on new borrowing. Unless someone comes up with a great idea fast, they might be running out of time.
15. Land's End
Land's End is all about the casual lounger and traveler; casual clothes, casual luggage, furnishings for the casual home. Unfortunately, they may also have taken too casual an approach to their business plan, and now they're paying the price. Being connected with the struggling Sears didn't help, but former CEO Federica Marchionni is believed to have made some inexplicable errors in his management of the firm.
One of these errors was branching away from the goods that Land End was known for and launching 'Canvas'; a specialist in-house brand designed at younger and more fashionable people than the average Land's End customer. The products didn't resonate with the intended market, the existing customers felt alienated, and the new line was a disaster both commercially and in terms of PR. Sometimes, it's best to stick with what you're good at.
16. Guitar Center
When you turn on MTV these days, you'd be lucky to find it playing music, let alone rock and roll music. Everyone seems to be into rap or hip hop, or electronic music. You just don't see guitars as much these days, and that's bad news for the Guitar Center. They may have been trading for over half a century and did very well when rock was 'in', but now it isn't, they're up against it. Their current debts sit at $900m, and sales dropped 36% in the ten years from 2005 to 2015.
Somehow, the firm managed to agree a refinancing deal for its debt and has responded to the drop in sales by opening new stores in what it considers to be better locations. It's a bold move, and we hope it works out for them. What they could really use is someone to make rock and roll cool again!
17. Southeastern Grocers
How much you know or care about this one will depend on where you live! If you're resident or familiar with Florida, Alabama, Louisiana, Georgia, Mississippi or the Carolinas, you'll probably have shopped at a Southeastern Grocer's store before. You might not have realized it though. They're actually the parent company of a number of better-known stores, including the Winn-Dixie grocery and Bi-Lo.
As with the other grocery and pharmacy casualties we've seen on this list, they've been squeezed hard by Walmart and the internet. Southeastern surrendered to Chapter 11 bankruptcy protection in order to survive, ditching over 100 of its stores and shaking off $600m in debt in the process. It now believes that it's over the worst and will turn its attention to re-branding and reshaping the stores which survived. Expect to see new brand names where the old stores once stood, but it will still be Southeastern Grocers behind it all.
18. Nine West
If you have a Nine West store near you, you might want to take a photo of it and record of for posterity. There are only 25 Nine West stores still open, and unless things improve for the company soon, there will be none. They're saddled with over one and a half billion dollars of debt, and actively considering Chapter 11 bankruptcy. The company is understood to be for sale in whole or in part and has already found buyers for its well-known Easy Spirit brand.
Even if Nine West does survive, it won't be the store you remember. We all associate them with shoes and handbags; the current plan in the boardroom is to move away from that and promote jewelry and clothing instead. Over the past few years, there are fewer people buying heels, sandals and ballet flats, leaving Nine West with piles of unsold stock and even bigger piles of debt.
19. David's Bridal
One of the consequences of living in more austere times when it comes to personal finance is that the average person spends less on things they used to go big on. That can mean buying a smaller car, buying a more modest home, or having a less expensive wedding. Less expensive weddings are very bad news for David's Bridal. Not only are they selling less, but they're also due to repay a $520m loan in 2019 and a further £270m in 2020. Recognizing they're on the edge of a cliff they've appointed a new CEO in Scott Key, and his first big job will be to postpone or restructure those debt repayments.
No sooner had Key taken his seat than global commercial credit reference agency S&P put the boot into him by reducing the company's credit rating. The options for refinancing or rearranging those debts were sharply reduced, and a whole new strategy might be required of David's Bridal is going to make it into the 2020s.
20. Bon Ton
There's a note of hope in the tale of Bon Ton; not just for the 100-year-old retailer, but for all the other companies on this list who are also struggling! Bon Ton wasn't just struggling; they were finished. They filed for bankruptcy in early 2018, were sold, and were then liquidated. They ceased to exist completely. Despite that, in October 2018 it was announced that the Bon Ton website was back online, and a small number of new Bon Ton stores would open in select locations.
The company who bought the bankrupt company has decided their acquisition still has name value, and so are giving it the chance to breathe again. They'll focus more on the online side of things, but in their stores will mainly offer the same wares as they used to. What makes their owners think that will succeed when it failed so dramatically last time is unknown, but we suspect the location of those stores will be crucial to their prospects.
21. Tops Market
One of the keys to staying in business - especially big business, where minor changes in profit margins can have a major impact - is noticing when the buying habits of your customers change. Tops Market seem not to have noticed the growing trend for shoppers to prefer locally sourced food, or the increase in vegetarian or vegan-only buyers. Without adjusting their product range, they were suddenly and sharply squeezed by their competition, and left with no option but to file for bankruptcy.
Filing for bankruptcy isn't always the end though, and if you live on the East Coast and know Tops, if your local store is still there it may survive a while longer. Bankruptcy has allowed Tops to freeze interest payments on its debts, which were previously costing the struggling firm $80m a year. With that weight off their backs they're finding it a little easier to breathe, and for now, the stores remain open.
22. Cole Haan
There are levels of being a 'luxury brand', and you find out about them when consumers are spending less money than they used to. True luxury brands like Rolex and Versace are unaffected because the people buying from them are rich, and don't tighten their belts during an economic crisis. For a mid-range luxury store like Cole Haan, a recession is a painful reminder that their client base isn't as wealthy as they'd like them to be. USA Today named Cole Haan as one of the 26 brands most at risk of closure in 2018, and not without good reason.
When Nike controlled the Cole Haan purse strings everything was fine. Going solo in 2013 under the stewardship of Apax Partners was always going to be a risky move, and the new business plan was even riskier. Instead of making the dress shoes its always been known for, Cole Haan announced a move into sneakers, putting it head to head with its former owners. Given the size of Nike, there was only ever going to be one winner.
23. Charlotte Russe
The famous motto of women's clothing outlet Charlotte Russe is 'fashion that's trendy, not spendy'. Good quality budget clothing will always be in demand, but it's a hotly contested area when it comes to catching the eyes of customers, and one wrong move in the styling department can see your reputation take a serious hit overnight. Recently not enough buyers have agreed that Charlotte Russe's offerings are all that 'trendy', and so they haven't been 'spendy' in the store.
By the end of 2017, the company had debts of $90m and was seeking to agree payment holidays on store rentals to stave off the threat of bankruptcy. The injection of a $214m loan into the company removed the immediate threat and saw their credit rating revised upwards by S&P, but they still have a long way go to before they're out of the woods. Their Summer 2019 range best be on point!
Claire's, also known as Claire's Accessories, was once a rite of passage for every teenage girl. No outfit for a night out (or even some nights in) was complete without a little something from Claire's to set it off. 'Accessories' under Claire's definition could include anything from belts to bracelets to earrings; including having your ears pierced so you could wear the rings. It set up shop in 1961 and had been successful ever since; until around early 2017.
The cause of its struggles is the same old story; increased competition, inability to drop prices as low as internet retailers, and downturn in customers visiting high street stores. The inevitable happened in March 2018 when Claire's filed for Chapter 11 bankruptcy in an attempt to deal with its uncontrolled debts, which by that point were in excess of $1.9bn. Two months later it had shut down 130 stores and was looking for a buyer.
25. FullBeauty Brands Holdings Corp
One of the major positives from the early days of internet trading was the diversification of products. Plus-sized people, who'd historically been ignored by high street fashion brands, suddenly founds companies marketing directly to them. FullBeauty.com was a leading light in that field, owned by the same holding firm who also managed Woman Within, Jessica London, Kingsize and Brylane Home.
The trouble for such brands began when much larger companies, for example, Amazon, realized there was money to be made by targeting the plus-sized market. With Amazon's marketing resources and basement pricing, FullBeauty's share of the market was rapidly ripped away. Their sales fell 30% in quarter 1 of 2017, which would be unsustainable for a business twice their size. In response, they appointed three new directors to the most senior positions within the firm and have promised that they will return to growth in the near future. It's unclear how they plan to do that.
26. Eddie Bauer
Being in financial difficulty is nothing new for the 'Great Outdoors' firm Eddie Bauer; they filed for bankruptcy once before in 2009 and were rescued when Golden State Capital stepped in to buy the firm. A decade later, history is repeating itself. Although trading figures have largely remained steady, it's the company's debt that they're struggling to shift or restructure, and the serving repayments on the debt are crippling the firm.
Golden State Capital considered selling the company in 2017 to solve the problem, but in the same year, their credit rating was downgraded by S&P, which made them a less desirable proposition. It's not all bad news though. The company has rallied a little in the last twelve months and is apparently now in talks with California's Pacific Sunwear about a merger. The news was greeted with enthusiasm by the stock exchange, which saw Eddie Bauer's shares increase in value.
27. Bluestem Brands
Bluestem Brands has a lot of products to sell. Whether it's health, beauty, electronic appliances or general apparel, Bluestem have got you covered. With so much range (and including so many areas of need) they're a brand that should always be in demand, but they've run into trouble. You might not even be aware you've bought from them before; they're the ultimate owners of Appleseed's, Blair, Fingerhut, Bedford Fair and many other brands. They never publicly announced they were in trouble, but the figures told their own story.
In the first quarter of 2018, sales were down 10.9% on the same period of the previous year. That was enough for Business Insider to list them as being 'at risk', and you don't need to be a math expert to realize that a 10% drop-off is bad news for profit margins. Bluestem is still with us now, but whether all of their trading styles will survive is unknown.
28. PetSmart Inc
It's almost inconceivable that a brand with as many stores as PetSmart could be on the brink of collapse, but it's close. Many of us think of PetSmart the moment we need to go out and buy anything pet related, so what's the problem? We'll answer that for you; it's debt. As with so many other firms, PetSmart's debt has slowly built up to the point where it's become an issue. It currently stands at $8bn.
Although many of the debts don't need to be repaid until 2022 at the earliest, PetSmart currently lacks ideas as to how they might meet those repayments. They've called in specialist advisers to assist with restructuring the company, and also stepped further into the online marketplace as a response. Deciding the quickest route to success was to buy an established brand and run it themselves, they acquired Chewy. We don't think the $3.35bn price tag will have helped much with their bottom line though; according to Reuters, it's the most anybody has paid for a website in history.
Pay less? The popular shoe retailer wished it could when it filed for Chapter 11 bankruptcy in 2016, but the bills had to be paid somehow, and so it had no choice. The impact of the bankruptcy process was huge and involved the loss of over six hundred Payless stores across the country, along with the jobs of thousands of staff who worked in them. It was painful, but it seemed to work. In August 2017 Payless emerged from bankruptcy, restructured and alive.
Commercial credit rating providers S&P still aren't impressed though. Despite the bankruptcy process being over, there's still a fear that Payless will default on its commercial obligations. There are still 3,500 Payless stores still open, which is a lot of resourcing to maintain if the company isn't making enough money to do it. New CEO Paul Jones is more bullish, recently stating that the balance sheet is strengthening and the remaining debts have been restructured.
30. Toys R Us
This one got more mainstream news reporting than perhaps every other business on this list put together, and that might because it felt like a knife through the heart of our childhoods! Toys R Us had been struggling for a while; yet another company that Amazon and firms like it had taken market share from. Somehow, we never believed they'd really close, but after filing for bankruptcy in 2018, all 735 stores in the US shut down almost overnight. Toys R Us was gone.
The liquidation happened rapidly and rippled across the world. The bankruptcy was filed in February 2018. By April, every Toys R Us store in the world had closed down. There may yet be a twist in the tale though; in late 2018, the bankruptcy auction of the company's remaining assets was called off, and rumors circled that a buyer had been found. We may not have said our final goodbye to Geoffrey after all!
31. Burger King
Although Burger King now has over 12,000 stores worldwide, it appears that some franchise owners are having financial issues. Just last year, 9 Burger Kings in Minnesota closed it doors as a result of their ownership group, Illinois-based P3 Foods, filed for bankruptcy last October.
Duke and King Acquisition Corp., a Burnsville, Minn.-based Burger King franchisee, has sought Chapter 11 bankruptcy protection and is currently seeking buyers. The company operates 92 Burger King units throughout the Midwest, including in Minnesota, Iowa and Wisconsin.
Trending On BuzzFuse: