It’s a tough time for retailers as changing tastes and shopping habits have completely upended the retail industry.
Since iconic sporting goods retailer Sports Authority filed for bankruptcy earlier this year, many more retailers now have growing concerns about the viability of their brick-and-mortar locations going forward, according to a report from Bloomberg.
“You could make the argument that, given the state of retail, everyone’s going to be analyzing — whether or not it’s retailers or lenders — what makes the most sense and, in particular, vendors,” Mike Murray, a senior managing director at Wells Fargo, told Bloomberg.
It remains to be seen what retailers will do to fend off these fears as more and more transactions move online.
Meanwhile, the Aéropostale bankruptcy drama marches on, as earlier this week private equity firm Sycamore Partners filed an objection to the company’s bankruptcy reorganization plan. Sycamore claims the ailing teen retailer has spent millions during its bankruptcy phase without receiving a “firm purchase offer of any kind.”
Instead, Sycamore wants to liquidate the about $150 million in loans it poured into Aéropostale in 2014 to become a major stakeholder in the company.
But despite Sycamore’s push for liquidation, Versa Capital Management is still reportedly engaged in talks to buy 500 Aéropostale stores, mostly located in U.S. malls. The Versa deal would allow those Aéropostale stores to remain open and save thousands of jobs.
The new owner of Southern Season, a Chapel Hill, North Carolina-based gourmet food retailer that was auctioned off in bankruptcy court last week, said they are taking a patient approach to the business before they decide on making any changes.
Calvert Retail, a Delaware-based kitchenware retailer that owns and operates six Kitchen & Company stores, acquired Southern Season last week for $3.5 million.
“We’re going to be observing and learning as much as we can,” Calvert Marketing Director Kaela Mast told The News & Observer of Raleigh, North Carolina. “We haven’t even had a chance to see any reports on what items do really well here.”
Calvert Retail apparently “specializes” in turning around bankrupt food companies. The company acquired Kitchen & Company out of bankruptcy in 1999 for $3.3 million.
And many retailers are banking on a big back-to-school shopping season — or else.
New York Post reports that Claire’s Stores, another struggling teen retailer, needs a big boost from this year’s back-to-school shopping season or will likely face bankruptcy. Claire’s Stores operates more than 3,000 stores but is also saddled with “overwhelming” debt of about $2.4 billion and has seen a 5 percent sales decline already this year.
“In the last nine months, the retail environment has been plagued with an unusually large number of high-profile retail bankruptcies, led by Sports Authority, which not only was unable to successfully reorganize and stay in business but also was unable to sell virtually any of its existing stores as going-concern locations,” Charles M. Tatelbaum, a Florida bankruptcy attorney, wrote in an opinion piece for South Florida Reporter. “This, along with other retail failures in the industry, including teen retailer Aéropostale, creates the need for landlords, suppliers, taxing authorities, employees and even consumers to understand the need for protection from substantial or even catastrophic losses.”
Despite all this doom and gloom in the retail world, the latest jobs report was very strong, as the U.S. Department of Labor said that only 261,000 new jobless claims were filed last week, and 262,000 unemployment claims were filed the week prior. That makes 77 consecutive weeks of jobless claims below 300,000, with that streak not surpassed since the 1970s.
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