Last year, with its store closures and traffic declines, was a financial disaster for scores of companies large and small. It was, however, an excellent year for bankruptcy lawyers and restructuring consultants, who have had considerably less work this year in the retail world.

So far, 2021 has brought a dramatic decline in Chapter 11s, defaults and distress, thanks in large part to government stimulus, cheap money and the comeback of shopping.

No one knows if or how long the lull in bankruptcies will last. Retail is not without its struggles right now. Logjams all along the supply chain are causing costs to skyrocket and inventory to fall. The industry is still competitive and as fast-changing as it ever was.

Since 2017, Retail Dive has published watch lists of companies in the industry most at risk of bankruptcy. This year, given the broad-based boom and large-scale balance sheet restructuring in the industry, things look quite different.

For one thing, regulars on the watch list — such as J. Crew, Neiman Marcus, J.C. Penney, Ascena and GNC — filed for bankruptcy in 2020. That allowed them to restructure their debt loads and businesses, making them healthier. In many cases it also reduced public financial reporting after the companies reorganized under private owners, making them less visible to firms that measure default and bankruptcy risk.

Since 2018, Retail Dive has published its watch lists using FRISK scores from CreditRiskMonitor, which specifically measure the probability of a company with publicly traded stock or bonds filing for bankruptcy within 12 months. The scores factor in various financial metrics, trading volatility and analytics from the firm's own platform that is often used by company credit managers.

In spring 2020, those retail companies with the lowest FRISK scores, indicating the highest risk of bankruptcy, numbered 27. By that fall, after a wave of bankruptcies following the worst months of the COVID-19 crisis, the list stood at 17.

As of Oct. 1, retailers with the lowest FRISK scores had fallen to three.

Party City and Rite Aid each have FRISK scores of 1, indicating a 9.99% to 50% chance of filing for bankruptcy within the next 12 months.

Online apparel seller Digital Brands has a FRISK score of 2, which comes with a 4% to 9.99% chance of bankruptcy by CreditRiskMonitor's calculations.

And that's it.  

Because it focuses on publicly traded companies, the FRISK score doesn't cover the entire world of retail, and its metrics don't capture every aspect of a company's performance or financial profile.

Another risk measure is S&P Global Market Intelligence's list of most vulnerable retailers, which again covers publicly traded companies. As of Sept. 17, that list included Express, Casper, J. Jill, Tuesday Morning, Digital Brands Group and Vince, all of which had between a 9% and just over 20% chance of defaulting over the next year, according to S&P.

Debt ratings provide another window into who is vulnerable to default (which can mean a lot of things) and bankruptcy. Those companies that carry C-level ratings with Moody's include 99 Cents Only, Belk, Talbots, the reorganized Neiman Marcus and Tailored Brands-owned Men's Wearhouse.

Yet another measure of risk is credit protection prices. Vendor finance specialist Cherokee Acquisition runs a marketplace for claims puts. The fee rates for a claims put, a form of credit protection on a vendor's accounts receivables, would be triggered by a retailer's bankruptcy filing. Prices for the financing rise with the expected risk of a filing.

Highest rates of all are for Tailored Brands, which as of Sept. 17 were a monthly rate of 3% on covered invoices to the retailer.

Many of the companies listed so far here also appeared on a list Retail Dive published in September based on financial health scores from RapidRatings, which measures default risk and company health based on dozens of financial metrics.

On that list of retail companies with weak financial health scores were: J. Jill, Express, Tuesday Morning, Party City, Rite Aid, The RealReal, Farfetch and Chico's.

Taken together, the above represent 20 companies that various analysts and investors still deem vulnerable to bankruptcy and other forms of default — and even that list is not comprehensive of all risk ratings or vulnerable players in the industry.

Here is a closer look at some of the companies at risk:

Tuesday Morning

Off-pricer Tuesday Morning went through a bankruptcy in 2020, a year that brought deep pain for the retailer that was without an e-commerce channel and already struggling to grow its sales and profits. Just a couple months after exiting bankruptcy, with a smaller footprint, Tuesday Morning was listed on S&P Global Market Intelligence's list of most vulnerable publicly traded retailers.

This year, Tuesday Morning has tapped former executives from off-price peer Burlington as well as from Michaels as it tries to engineer a turnaround. In its most recent quarter, Tuesday Morning reported comparable sales that had returned to 2019 levels and a smaller operating loss, but also smaller margins because of supply costs.

Party City 

Party City's sales are ticking up from last year, and it is back to operating at a profit, after the early pandemic months weighed heavily on its sales and led to massive losses. But the company went into the pandemic with struggles, including a large debt load. The delta variant's impact on social gatherings going forward adds a layer of uncertainty to the party goods seller.

As it heads into the back half of the year, Party City is planning to ramp its Halloween pop-ups up from last year's 25, though its holiday hiring plans fall short of last year.  

Belk

Belk was in and out of bankruptcy so quickly this year that you might not even have noticed. The company entered Chapter 11 to execute a quick restructuring with the support of major lenders, which brought in new capital and kicked out some maturities.

The department store chain, more than a century old, exited with its store footprint in tact and private equity sponsors Sycamore still in charge. Since filing, the company has revamped its C-suite, including at the chief executive spot.

Digital Brands Group 

Just months after an initial public offering, S&P put Digital Brands Group on its most vulnerable retailers list. Part of that was its debt, which is not large per se but earlier this year was deemed significant for a company of its size. Since its initial listing on S&P's list, Digital Brands Group has made another acquisition in the apparel space and secured an equity line of credit.

Together, the acquisition — of the brand Stateside — and new financing made for a stronger cash flow and balance sheet, Digital Brands CEO Hil Davis told Retail Dive at the time. Digital Brands aims to rapidly expand, pursuing a vision of being a brand conglomerate in the apparel, home and beauty categories, with a platform that can cross-sell its labels to consumers.

Tailored Brands

Tailored Brands, owner of Men's Wearhouse and Jos. A. Bank, was uniquely vulnerable to the pandemic's store closures and the rise of the work-from-home era. After closing hundreds of stores and filing for Chapter 11, the company emerged from bankruptcy in December.

Months later, the company was back in court, its attorneys explaining why it needed an emergency infusion of cash from an existing lender and owner following its reorganization. According to court testimony and documents, the company almost immediately ran into liquidity shortfalls after emerging and was staring down another bankruptcy, and possibly liquidation.

The retailer got its emergency funds, over the objections of lenders-turned-shareholders who lost millions due to the terms of the new loan. Since May, the company has made a series of executive appointments, including a new chief technology officer.