We Are Motley. A Message of Solidarity From The Motley Fool.

10 Retailers on the 2020 Death Watch

Author: Jeremy Bowman | March 24, 2020

A black and white photo of a graveyard.

Source: Getty Images

1 of 12

A new threat

Things were already hard enough for brick-and-mortar retailers before the coronavirus pandemic hit. Online retailers like Amazon were taking market share and mall traffic was declining as shopping habits have shifted.

However, the COVID-19 outbreak has presented a threat to the industry unlike any before it. Retailers across the country are closing stores to prevent the spread of the virus, and even when they reopen, customers may be reluctant to shop in a crowded store depending on what's happening with the health crisis.

Additionally, there will almost certainly be a recession, which will tamp down spending further.

In that environment and with the current crisis, a number of retailers would be likely to close their doors. Here are 10 that could fall into the abyss.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

Next

A J.C. Penney department store.

Source: J.C. Penney

2 of 12

1. J.C. Penney

The veteran department store chain, J.C. Penney (NYSE: JCP) has been struggling for years ever since former CEO Ron Johnson led a misguided revamp of the company that sent comparable sales plunging. The retailer has $3.5 billion in debt and has been unable to turn a profit in recent years, at least under generally accepted accounting principles (GAAP). Meanwhile, comparable sales fell 7% in its most recent quarter.

Like a lot of retailers, J.C. Penney has closed its stores and offices because of the COVID-19 pandemic, at least through April 2.

The company has $1.8 billion in liquidity thanks to a credit facility, but the closures will put it in a deeper financial hole. A turnaround for Penney already seemed unlikely. Now, it looks pretty much impossible.

ALSO READ: Has the Coronavirus Pandemic Doomed J.C. Penney?

Previous

Next

Professionally dressed woman standing with arms crossed in an office.

Source: Getty Images

3 of 12

2. Ascena Retail Group

Ascena Retail Group (Nasdaq: ASNA), the parent of women's apparel retailers including Ann Taylor and Lane Bryant was already in a hole before the coronavirus outbreak hit.

The retailer had closed its Dressbarn chain and sold Maurice's. Now valued at just around $20 million despite owning thousands of stores, Ascena said last week that it would close all of its company-operated stores through March 28, though if the outbreak continues to spread they may be closed longer than that.

The company is also withdrawing its guidance that it had given just a week earlier. It had an operating loss of $140 million in its most recent quarter, and is in a poor financial position. Extended closures could lead to bankruptcy.

Previous

Next

A somewhat blurry photo of the inside of a well lit department store.

Source: Getty Images

4 of 12

3. Stage Stores

A few months ago, Stage Stores (NYSE: SSI) was suddenly soaring. The department store chain's decision to pivot to an off-price model after its acquisition of Gordman's appeared to be paying off as comparable sales jumped 17.4% in the third quarter.

However, comparable sales growth slowed to just 1.4% over the holiday season, and it slashed its guidance. Now, the company is at risk of being delisted by the New York Stock Exchange.

Stage has yet to make an announcement about closing stores as most of its stores are located in the interior of the country where coronavirus has yet to have major impact. However, that could change in the coming weeks and further pressure its business.

Previous

Next

An Express ad campaign with three female models in Express clothing in a city street.

Source: Express

5 of 12

4. Express

It's a tough time to be a mall-based retailer. Mall traffic was already declining before the coronavirus outbreak hit, but the epidemic has forced a number of malls to close, including those of Simon Property Group, the country's biggest mall landlord.

Express (NYSE: EXPR) was already struggling with competition from online retailers and with fewer mall customers, but the current crisis poses a serious threat.

The company had planned to close 100 stores by 2022 as part of its turnaround plan, but the next few months will be tough as apparel sales are likely to plunge with much of the country stuck at home and focused on buying food and essentials.

Express said it would close all its stores through March 27, though the closures could last longer than that.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

Next

A francesca's store entrance.

Source: Francesca's

6 of 12

5. Francesca's Holdings

Francesca's Holdings (Nasdaq: FRAN) was once a solid retail stock, but it's unraveled in recent years amid disruption from the online channel and its own execution problems. Today, Francesca's is worth less than $10 million.

The company said last Friday that it had closed almost all of its stores because of the coronavirus outbreak, which could put it out of business.

As of its most recent earnings report, the company had $21.2 million in cash and equivalents, and $24 million available from a credit facility.

If stores remain closed for a sustained period of time, the company will need more funding or may have to shut down.

ALSO READ: Coronavirus Lesson: Balance Sheets Matter

Previous

Next

A Stein Mart storefront.

Source: Stein Mart

7 of 12

6. Stein Mart

Earlier in the year, Stein Mart (Nasdaq: SMRT) had agreed to sell itself to Kingswood Capital Management for $0.90 per share. However, the deal was not expected to be completed until later in the year. Now, amidst the coronavirus crisis, the stock has fallen to less than $0.30 per share, a strong indicator that investors expect Kingswood to back out of the acquisition as Stein Mart is an unprofitable company that has been forced to close all its stores at least through March 31.

If the crisis persists, the deal could fall apart, which would further jeopardize Stein Mart's future.

Previous

Next

The Container Store building with employees lined up out front.

Source: The Container Store

8 of 12

7. The Container Store

The Container Store (NYSE: TCS), the home-organization specialist, has been struggling for years despite a once-promising IPO. Through the first three quarters of its current fiscal year, the company has lost $30 million in free cash flow. The retailer also has just $14 million in cash and $64 million in liquidity compared to $300 million in debt.

The Container Store has not yet made an announcement about closing stores, but one is likely coming, especially since the company prides itself on its employee-first culture. However, store closures will test the company's liquidity and will put it deeper in a financial hole, if not worse.

Previous

Next

Man in a muscle shirt looking at protein powders in a supplement store.

Source: Getty Images

9 of 12

8. GNC

GNC (NYSE: GNC) has been struggling for years as selling nutritional supplements in thousands of stores has become outdated with the rise of e-commerce.

The company's comparable sales have consistently declined and it's on track to report a loss for the year. In addition, it has $859 million in debt.

GNC's stores have not yet closed because of the coronavirus pandemic, but they're likely to as more states order the closing of non-essential businesses.

Previous

Next

Mannequins displaying clothes inside a department store.

Source: Getty Images

10 of 12

9. J. Jill

J. Jill (NYSE: JILL), the women's apparel retailer is one of many that has been struggling. The company recently drew down $33 million of debt from its credit facility, a sign that it's already facing a cash crunch, even as the coronavirus crisis appears to be just beginning.

The company has also closed its stores through March 27, though they may remain closed longer. With the company already struggling financially, it may not be able to endure an extended outbreak.

ALSO READ: Have Cash to Invest? Then Keep It Away From These 3 Stocks

Previous

Next

Man adjusting the cuffs of his suit.

Source: Getty Images

11 of 12

10. Tailored Brands

Tailored Brands (NYSE: TLRD), the parent of Men's Wearhouse and Jos. A. Bank has also been floundering for years. The men's suit seller is going to face a particularly challenging market over the coming months as almost every usual office worker works from home where they don't need a suit.

The company also said that it would close its stores and e-commerce operations through March 28, but continue to pay its employees. An extended closure may make it difficult to keep up that policy and remain solvent.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

Next

A fork in the road along a wooded path.

Source: Getty Images

12 of 12

Peak uncertainty

Retailers have probably never faced this level of uncertainty before. They are being forced to close stores because of a global pandemic. They don't know when they'll be able to reopen them, and they don't know if customers will come back as they may be worried about safety issues, or they may have lost their jobs and won't have money to spend.

With much of the industry already struggling, the coronavirus outbreak could be a final death blow for retailers teetering on the cusp of bankruptcy.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool owns shares of The Container Store Group. The Motley Fool has a disclosure policy.

Previous

Next