It’s only April, but 2019 is already looking to be another rough year for struggling retailers.
By mid-March there were already more than 4,800 announced store closures from retailers like Gap, Victoria’s Secret, J.C. Penney, and Abercrombie & Fitch. Four retailers had filed for bankruptcy protection: Payless ShoeSource, Charlotte Russe, Gymboree and FullBeauty Brands. In 2018, Coresight Research tracked 5,524 store closings for the whole year. That total was down 30% from the record 8,139 closures announced in 2017.
The news isn’t all bad. Moody's Investors Service (NYSE: MCO) came out with its annual analysis of the retail landscape recently and forecast a less volatile year for U.S. retailers as it relates to defaults and bankruptcies. The agency expects the default rate for U.S. speculative-grade retailers to fall to 4.3% a year from now, after peaking at 19% in April of 2017.
But Moody's warns that at least 17 additional U.S. retailers could go into default or bankruptcy this year. What are they struggling with? Debt, e-commerce problems, and fierce competition from bigger players.
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