Retail

Coronavirus Closures Affect 630K Retail Businesses

Coronavirus Closures Affect 630K Retail Businesses

The retail closures related to the coronavirus have been a death knell for an already struggling retail industry, and many companies might not make it through, according to a report by the Financial Times.

The industry is in dire need of cash, but the recently passed $2.2 trillion stimulus bill isn’t likely to help businesses that were already feeling a crunch from the economy before the virus.

While there are outfits like Walmart and Amazon seeing historic numbers, other retailers, like Macy’s, Nordstrom and others, are feeling a cash crunch like never before.

Somewhere in the area of 630,000 outlets have been forced to close, according to Coresight estimates, and the National Retail Federation estimates that $430 billion in revenues will disappear over the next three months.

Workers in the tens of thousands have been furloughed in an attempt to save cash. Companies like Victoria’s Secret and Macy’s have begun those measures.

John San Marco, a research analyst at Neuberger Berman, has been trying to figure out just how bad the damage will be. The crisis, he said, will probably lead to a “meaningful acceleration of the retail shakeout.”

About 30 well-known brands might end up filing for bankruptcy protection, according to Jan Rogers Kniffen, an industry consultant.

Many businesses have been searching through the new congressional bill looking for help in weathering the storm.

One of the toughest issues is that many companies were already struggling before the virus forced the shutdowns. Companies like Forever 21 and Pier 1 both filed for bankruptcy recently, and the retail industry made up almost 20 percent of corporate debt in Q4.

Mark Cohen, an analyst and the director of retail studies at Columbia University, said he didn’t think loans for the government would be enough to revive some companies. “A business that was struggling going into this crisis and is already leveraged up is unlikely to recover by taking on additional loans,” he predicted.

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