The running list of 2018 retail bankruptcies
Retailers filed for bankruptcy at a record rate last year and that trend continues in 2018. Here's a look at which retailers have filed plans to restructure, find a buyer or liquidate through Ch. 11.
Editor’s note: The following post will continue to be updated to reflect the current major retailers that have filed for Chapter 11 bankruptcy protection in 2018. View this year's bankruptcies.
Updated: Mar. 8, 2018
To put it bluntly: Last year was a dismal one for certain retailers.
Those "certain" retailers include ones with a lot of debt, that depend on malls and whose business is especially susceptible to the explosion of Amazon online and off-price sellers in the physical world. (Think department stores and specialty retailers, especially those selling apparel.)
By December, 2017 had seen 26 major retail bankruptcies (defined in this case as companies with more than $50 million in liabilities), according to data from AlixPartners. That surpassed the 20 bankruptcies posted in 2008, when a major recession ravaged the sector.
Some expect a slowdown in bankrutpcies and store closures this year, but by the first week of February, three major retailers had filed for Chapter 11, including Bon-Ton Stores, which does nearly $3 billion in sales. Whatever the tally, 2018 could be a bellwether year in telling us how much more retail consolidation might be left for the industry before things stabilize.
As we did last year, we are keeping a close eye on the retail bankruptcies of 2018. Below is a list of the major retail filings this year.
Click on a retailer to learn more about their bankruptcy.⬆
Filing date: Mar. 6
Outcome: Entered bankruptcy with financing commitments and expects a speedy exit.
This is The Walking Company's second trip to bankruptcy court in a decade. Founded in 1991, as a retailer of European "comfort shoes," Walking Company — which includes the FootSmart and Big Dogs Sportswear banners — eventually expanded into malls across the country and broadened its focus to include more shoe types as well as clothing and lifestyle products. In 2008, it filed after a rapid store expansion ran into a massive recession. It emerged from Chapter 11 with its core business significantly improved, and then 10 years later ran into another sector downturn.
Leading up to its 2018 filing, the company tried to renegotiate its store lease terms to lighten its rent burdens, but had only limited success in the effort. It also suffered when Wells Fargo significantly devalued the inventory that backed a major loan and when a key vendor stopped supplying its successful private label line.
Walking Company entered bankruptcy in March with agreements for new investments and financing, and a clear path out of bankruptcy. Key to its future will be negotiations with landlords in Chapter 11 and, more importantly, making good on the new cash to adapt its model to keep up with customers and secular changes in retail.
Filing date: Feb. 4
Outcome: The company has a turnaround plan and financing, but it could also sell itself — and some stakeholders want it to liquidate
Bon-Ton Stores, with roots going back to the 19th century, is still tightly connected to its founding family. Once privately held and mainly debt-free, it went public and expanded over the past two decades. Today it has a debt load many see as unsustainable as its sales contract in a troubled department store sector.
Bon-Ton entered 2017 under financial pressure, but many analysts thought the company had the liquidity to muddle through the year and into its next debt maturities in 2018. But as the bad news about the company flowed, the bankruptcy chatter grew louder. The retailer’s suppliers reportedly began pressing for tighter terms on shipments to the retailer last fall. In September, the retailer hired AlixPartners for help with its turnaround efforts and began a search for a financial adviser to help with a possible debt restructuring. In bankruptcy court, the retailer disclosed it had also gone looking for a prospective buyer starting in late 2017, but no formal interest materialized.
In December, Bon-Ton failed to make a multimillion dollar interest payment, entering into a grace period that eventually lapsed as the company negotiated with its lenders. The retailer filed for Chapter 11 on Feb. 4 with agreements for more than $700 million in bankruptcy financing to keep the lights on. The company won court approval for the new financing soon after — over the objections from some bondholders calling for Bon-Ton to liquidate immediately in bankruptcy, calling the retailer’s prospects for survival in a shrinking department store sector “at best, uncertain, and in reality, unlikely."
Filing date: Jan. 11
Outcome: Reorganizing with a plan to close most retail locations and focus on e-commerce
The subsidiary of an international beauty retailer, Kiko USA played in a healthy and innovative beauty sector but had hitched its fortunes to malls.
As mall traffic and brick-and-mortar sales declined, the makeup seller launched a new line of business selling through Amazon and using its "Fulfillment by Amazon" program. That business, together with Kiko's own website, was growing in the double digits ahead of the company’s Chapter 11 filing. But physical sales shrank too fast for Kiko to adjust its cost base through lease negotiations. The company filed for bankruptcy protection in January with plans to close all but five of its domestic retail locations by the end of February.
Kiko USA’s CEO said in a court filing that the retailer has a strategic plan that focuses on its offerings, remaining stores and e-commerce business.
Filing date: Jan. 9
Outcome: Reorganizing with plans to shutter 65% of retail locations
A'gaci's recent physical expansion was particularly poorly timed — it came just as mall traffic started declining. After building out 21 new stores over the past two years, A'gaci is now looking to close 49 stores — almost 65% of its footprint — in bankruptcy.
Along with bad timing, the women’s fashion retailer also suffered from bad luck. The company’s CEO said in a court filing that major hurricanes last year "ravaged" some of the retailer's most profitable stores. The retailer's earnings fell by $7.2 million in the past year, and the timing of the earnings hit was also terrible — it came as a major debt maturity loomed in 2018. The hurricanes, earnings hit, overexpansion and problems with a business software system roll out all worked together pushed the company to file for bankruptcy protection in January.
Now the retailer, founded in 1971 and boasts, is looking to shrink its physical footprint and focus on its more profitable stores.
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