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By Brad Tuttle
Updated: May 19, 2020 3:35 PM ET | Originally published: May 6, 2020
A J. Crew store on 5th Avenue in New York City.
Bryan Thomas—Getty Images

We thought 2019 was the year of the retail apocalypse. It turns out that may have only been the prologue to the real chain store armageddon.

Retailers closed over 9,000 stores in the U.S. last year, according to Coresight Research, including thousands of closures from companies that completely went out of business in 2019 such as Payless Shoes and Charlotte Russe.

The coronavirus pandemic, which has closed nonessential stores for weeks around the country, is causing extraordinary hardships for a wide range of retailers. Unsurprisingly, retail companies that were struggling before the COVID-19 crisis (hello department stores) are faring particularly poorly in 2020. So are apparel retailers in general — because people who are stuck at home just aren’t buying clothes like they normally do at this time of year.

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A recent Census Bureau report showed that sales at clothing and apparel stores were down 50% in March, making it the hardest-hit retail category by far.

Analysts say bankruptcies are bound to spike as a result. “We project the default rate for speculative grade retail and apparel companies will surge to 17.2% by April 2021 from today’s 12.4%,” a Moody’s report stated in early May. That figure is “significantly above our prior call in March for the default rate to be a relatively tamer 6.34%.”

We’ve already seen one major apparel retailer file for bankruptcy in 2020, when J. Crew officially entered Chapter 11 bankruptcy proceedings on May 4. J.C. Penney followed and entered bankruptcy on May 15. On May 19, Pier 1 Imports, which had already entered bankruptcy and had closed stores because of the coronavirus pandemic, announced that it would be closing all of its stores permanently.

Who’s next? The retailers below are some of the biggest-name likely candidates. Take note, however, that a retailer’s decision to enter bankruptcy protection does not necessarily mean that the company is going out of business. (In other words: Sorry, no liquidation sales, at least not yet.) Companies file for bankruptcy in order to restructure debt and help them stay alive. For example, Forever 21 filed for bankruptcy last fall and closed over 100 stores by the end of the year, but it’s still in business.

But bankruptcy is obviously not a good sign, and it’s often just a prelude to a business going belly up. That’s what happened to Toys “R” Us. The classic toy retailer filed for bankruptcy in the fall of 2017 with the hope that it would stay afloat, but wound up closing all of its stores for good by the following summer.

Below is a list of 12 of the biggest retail chains getting crushed in 2020, and not only because of COVID-19. Keep in mind that these are hardly the only retailers struggling mightily at the moment. Nordstrom just announced it is closing 16 stores, privately-owned Brooks Brothers is currently seeking a buyer, and Lord & Taylor is expected to liquidate stores soon after they reopen.

Academy Sports + Outdoors

The sports and outdoors retailer Academy, which operates nearly 300 stores, was recently given a Caa2 rating by Moody’s, meaning its financial obligations are “of poor standing and are subject to high credit risk.”

Ascena

The company that owns apparel retail brands like Ann Taylor and Lane Bryant has been rated as a poor credit risk for over a year. Consumer demand for the kinds of items sold in these stores has declined steeply during the coronavirus pandemic.

GameStop

Tech and video game retailer GameStop was rumored to be headed toward bankruptcy before the coronavirus pandemic caused widespread store closures in the U.S. The company’s stock price has dropped roughly 75% over the past three years.

Gap

Gap, which owns Banana Republic and Old Navy in addition to its flagship retail brand, had previously announced it would close 230 stores in 2019 and 2020. In late April, the company announced it would need to borrow more money, and that it would suspend rent payments and possibly not reopen more store locations closed due to the coronavirus, Reuters reported.

GNC

General Nutrition Centers, or GNC, closed about 900 stores last year, and things are looking worse in 2020. “We believe conditions for GNC are deteriorating substantially due to the coronavirus pandemic, the anticipated macroeconomic downturn, and the limited access to capital markets,” S&P analysts wrote in a recent press release that downgraded the company.

Guitar Center

Guitar Center, which says it operates 297 stores in the U.S., currently has a Caa3 rating according to Moody’s, putting it at especially high risk of bankruptcy. The company “is trying to work out a deal with its creditors after skipping payments on two of its bonds,” Bloomberg reported.

J.C. Penney

Iconic department store chain J.C. Penney closes stores year after year, and seems to be on constant deathwatch. The company has reportedly been exploring filing for bankruptcy protection very recently. (J.C. Penney entered bankruptcy on May 15, after we originally published this story, and it also announced it will be closing over 200 stores over the next two years.)

J. Crew

Preppy apparel seller J. Crew has suffered a sales slump for years, and finally filed for bankruptcy in early May 2020.

Macy’s

Macy’s said it was closing roughly 125 stores even before the coronavirus pandemic upended the retail business in 2020. In late April, Macy’s began looking into raising $5 billion in debt to try to avoid bankruptcy, CNBC reported.

Neiman Marcus

In early May 2020, the luxury department store chain Neiman Marcus was widely believed to be very close to filing for bankruptcy. Indeed, the day after we first published this story, it did file for bankruptcy.

Sears

Sears Holdings, which ran the Kmart brand and its signature retail Sears stores, filed for bankruptcy in late 2018 and has shuttered a huge number of stores before and after then. Transformco, the current parent company of Sears and Kmart, now runs fewer than 200 stores in the U.S. — down from well over 3,000 15 years ago.

Victoria’s Secret

Over 50 Victoria’s Secret stores closed last year, and its parent company, L Brands, agreed to sell a majority of the struggling lingerie label in February. More recently, however, the sale of Victoria’s Secret was called off because the would-be buyer “did not agree with steps the lingerie brand took in response to the coronavirus pandemic,” the New York Times reported. It’s unclear where that leaves the fate of Victoria’s Secret, whose sexy image has been criticized as being out of touch with today’s consumers.

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