2017 is set to go down as the year of the retail apocalypse. Brick-and-mortar chains have announced more store closings this year than any other on record, and at least 6,700 are set to shut down operations this year or early next year. Among the victims are department stores, electronic stores, and mall fixtures -- the pressures of e-commerce and Amazon have meant that fewer Americans need to leave the house to go shopping, squeezing an already-overstored retail environment.
Still, you might be surprised by the big names on the list of businesses going under.
1. Toys 'R' Us
The nation's biggest toy retailer in the 1980s and 1990s, Toys 'R' Us faltered in the e-commerce era, making the mistake of allowing its website to redirect to Amazon for ten years, starting in 2000, in a deal that ended with Toys 'R' Us suing the e-commerce giant in 2004. A leveraged buyout in 2005 also saddled the toy retailer with debt, and several years of underperformance came to a reckoning in September when the company filed for Chapter 11 bankruptcy -- it faces $400 million in interest payments next year and $1.7 billion in 2019.
Toys 'R' Us is expected to begin closing stores after the holiday season, which is a crucial time for the toy industry.
2. Radio Shack
Like Toys "R" Us, Radio Shack reigned supreme in the electronics in the pre-internet days, but the company failed to successfully adapt its model, and has faced a similar fate to much of the rest of the retail electronics industry. With products that are easily sold through online channels, brick-and-mortar electronics retailers have been among the most vulnerable to Amazon.
The company declared bankruptcy in March, following a prior bankruptcy filing in 2015. At the end of May the company said it would close 1,000 stores immediately, leaving just 70 company-owned stores still open along with 500 dealer-owned stores. While the brand still exists today, it's a mere shell of its former self.
3. Hh gregg
Radio Shack wasn't the only electronics store to bite the dust this year. Hh gregg also filed for bankruptcy in March, saying it would restructure after facing several years of declining sales. In April, management said the company was going out of business as it could not find a buyer, and that it would close all of its stores.
At its peak in 2010 the company was worth nearly $1 billion, but falling electronics prices and a misguided expansion strategy did the company in. In August the brand was relaunched online, though the new owners have no plans to reopen stores.
Children's clothing store Gymboree filed for bankruptcy protection in June, and said in July it would close 350 of its 1,280 stores. The privately held company overexpanded and lost ground to Children's Place (NASDAQ:PLCE), a rival chain that has surged to all-time highs -- its shares have tripled in the last five years, and the company is now worth $2.4 billion.
By the end of September, Gymboree had emerged from bankruptcy. The company converted about $900 million of debt into equity, and closed hundreds of stores. With a $200 million credit facility and a new set of strategic initiatives, CEO Daniel Griesemer expressed optimism about the company's future.
5. The Limited
One of the first retailers to declare bankruptcy this year was women's clothing chain The Limited, which shut down all 250 of its stores in January and filed for bankruptcy a week later. Like other mall-based retailers, The Limited struggled with declining traffic and a saturated apparel retail industry. However, like hh gregg, the Limited reemerged as an online-only clothier in October after private-equity firm Sycamore Partners acquired its intellectual property for $26.75 million.
6. Wet Seal
On the heels of The Limited's bankruptcy, rival Wet Seal followed suit in February with its own bankruptcy declaration. After closing all of its stores, Wet Seal filed for bankruptcy for the second time -- the first was in 2015, when the company said it was unable to find a buyer. Declining mall traffic also proved to be a death blow for Wet Seal; it's one of many chains to be driven out of business as shopping patterns have changed. Like The Limited, Wet Seal has also reemerged as an online-only brand since having its assets acquired by Gordon Brothers in a bankruptcy auction.
7. Payless ShoeSource
In one of the biggest bankruptcies this year, discount footwear chain Payless ShoeSource filed for Chapter 11 in April, saying it would shut down 400 stores out of a total of more than 4,400 around the world. The news wasn't exactly a surprise: Moody's had downgraded its outlook on the company to "negative," citing upcoming loan payments.
Like Toys "R" Us, Payless suffered from a 2012 leveraged buyout by private equity firms. By the end of the summer, the company said it had closed 900 stores, and came out of bankruptcy after slashing its debt burden by about $400 million.
8. BCBG Max Azria
After closing 120 stores in January, BCBG Max Azria kicked the bucket in May. The company succumbed to the same forces that pressured The Limited and Wet Seal. The fashion label was acquired by Marquee Brands in August for $108 million. Marquee, a diversified fashion group, owns brands such as Bruno Magli, Ben Sherman, and Body Glove. Marquee said it would expand BCBG's presence through "monobrand boutiques, shop-in-shops, department stores, and e-commerce."
9. Gordman's Stores
Midwestern department-store chain Gordman's filed for bankruptcy in March with plans to liquidate its assets and inventory. The chain operated 100 stores in 22 states, and faced similar pressures to other department store chains: Sears, J.C. Penney, and Macy's have each closed at least a dozen stores this year, and nearly every department store chain is downsizing. Hudson's Bay sold the Lord & Taylor flagship to WeWork, and Lord & Taylor will now occupy just a quarter of its previous footprint.
Gordman's ended up selling 50 locations to Stage Stores, another struggling department store chain, and shuttered the remainder of its stores. Unsecured creditors ended up getting just $0.05 to $0.11 on the dollar.
10. True Religion
Denim retailer True Religion called it quits in July, filing for bankruptcy and saying it had $534 million in liabilities but just $243 million in assets. However, the company also said it had secured a deal with creditors to relieve it of $350 million in debt in exchange for significant equity stakes in the company. Like other fashion brands, the once-popular luxury denim maker fell out of style amid the rise of athleisure.
The company successfully came out of bankruptcy at the end of October with a plan that not only reduced debt but extended its payback date to 2022.
Yet another apparel retailer makes the list. Teen-focused Rue21 filed for bankruptcy in May as it negotiated debt reductions with creditors. At the time, Rue21 had plans to close 400 stores out of about 1,100 it had open at the time. Like other teen and mall-based retailers, Rue21 struggled with a glut of competition and declining mall traffic.
In September the company came out of bankruptcy with 420 fewer stores and an improved capital structure with a $125 million credit facility. Rue21 also posted better-than-expected results in its second-quarter report.
12. Gander Mountain
Sporting goods and outdoor equipment retailer Gander Mountain filed for bankruptcy in March, saying it would close all 126 locations. In May, Camping World (NYSE:CWH) won the auction to take over the company's assets for $390 million.
Like other sporting goods retailers that have declared bankruptcy recently, including Sports Authority, City Sports, and Vestis Retail Group, Gander Mountain, the parent of Bob's Stores and Eastern Mountain Stores, struggled to adapt to the rise of e-commerce, though it said it still had a core group of profitable stores. Camping World said it would reopen 57 Gander Mountain stores.
Women's shoe retailer Aerosoles filed for Chapter 11 in September, citing declining mall traffic and widespread promotions across the industry as footwear retailers across the board have struggled to adapt to market changes. The company said it would close all but four of its 78 stores, keeping flagships in New York and New Jersey open. The footwear retailer said it had received two proposals from potential investors, but had rejected both of them. However, it is still holding talks on a possible deal.
14. Vitamin World
The nutritional supplement sector has also gotten hammered recently, and shares of GNC and Vitamin Shoppe have tumbled in recent years. Privately held Vitamin World was unable to escape the misery, filing for Chapter 11 bankruptcy in September. Management said it was hoping to get out of expensive leases, and that it was in the middle of negotiating with landlords.
Pressure from the e-commerce channel as well as a move by its former parent company to tighten quality control standards in response to regulators seemed to doom the company.
Finally, perfume retailer Perfumania Holdings filed for bankruptcy in August, saying it planned to close 64 of its 226 stores and that it would renegotiate its remaining leases. In October the company emerged as a privately held enterprise, paying off shareholders at $2/share.
Perfumania came out with an $83.8 million revolving credit facility and 161 stores. Management also said it would invest further in e-commerce to improve its customers' online shopping experience.