These big retail chains are at risk of going under for good, new data shows

Goodbyes are never easy, and yes, so are the shops we frequent. Saying goodbye to a beloved retail chain can feel like a real loss. This year we’ve seen various big brands falter and close stores, including Sears, Kmart and Bed Bath & Beyond. But newly released data suggests other companies may soon face similar challenges — and the bottom line could be lost forever. Read on to find out which major retail chains will face bankruptcy in the next 12 months.

READ NEXT: These are all of the Bed Bath & Beyond stores closing over the next 4 months.

Bankruptcy isn’t always the end of a business, but it can be.

We often hear about corporate bankruptcy filings, but that’s not always the end of the line. According to the U.S. Securities and Exchange Commission (SEC), if a company cannot pay its debts, it can file for Chapter 11 bankruptcy to “restructure” and “try to become profitable again.” Chapter 7, on the other hand, indicates more serious difficulties and applies when a company has gone out of business and is forced to cease operations. In this case, assets are liquidated and then used to pay off debt.

According to US court data, nearly 22,000 companies filed for bankruptcy between 2016 and 2020, and there was a 29.7 percent drop in filings between 2019 and 2020. Additionally, data from Cornerstone Research shows that in just the first half of 2022, 20 US companies with assets in excess of $100 million filed for Chapter 11 bankruptcy.

However, according to new data, the predictions for the next 12 months are a bit grim.

You will recognize several of these popular retail brands.

Store in the party town
Ken Wolter/Shutterstock

As reported by Retail Dive, 18 stores are at risk of going under and some have a higher chance than others. As of Sept. 30, 10 companies have a probability of bankruptcy between 9.99 percent and 50 percent, the outlet reported, citing data from CreditRiskMonitor’s FRISK scores. Last year it was just three, indicating mounting troubles in retail.

With this analysis system, the lower the number, the higher the company’s risk of insolvency over the next 12 months. As you might have guessed, Bed Bath & Beyond made the list of those with a FRISK score of 1, as did other house brands like Kirkland’s and Wayfair. Digital Brands Group, Express and The RealReal were the three apparel companies listed, and iMedia brands Party City, Rite Aid and Tuesday Morning accounted for the television retail, specialty, drugstore and off-price sectors, respectively.

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Some high-risk trades might surprise you.

tuesday morning shop
Helen89 / Shutterstock

Bed Bath & Beyond has been dominating the headlines lately thanks to the imminent closure of 150 stores.

But Tuesday Morning’s shot may have surprised you, given that the company has previously filed for bankruptcy and closed 230 of its 687 locations in 2020. On September 21, 2022, the company announced that it had received a $35 million investment from Retail Ecommerce Ventures (REV), which owns Pier 1, and hopes to “establish a dynamic online presence and digital strategy.” while selling Pier 1 products.

However, according to financial results released just two days later, things are looking bleak at the moment, as the company reported an 8 percent loss on comparable store sales and a net loss of $28.1 million for the fourth quarter — a sharp increase from $18.9 -Dollar. Millions lost at the same time last year. Depending on how successful the new partnership with REV is, Tuesday morning could see a company filing “Chapter 22” bankruptcy, which is a clever (unofficial) name for companies filing twice for Chapter 11.

Party City is another well-known brand that might be on the chopping block. Much like a smaller party supplies retailer, 50-50 Factory Outlet, which recently went out of business in Wisconsin, Party City has struggled with losses during the COVID-19 pandemic. Apparently no gatherings were taking place at the time and demand for supplies was slowing. Helium shortages and increased costs have also created difficulties, and even with holidays like Halloween looming, Party City is facing increasing competition from online retailers, Retail Dive pointed out.

Other companies have a lower risk.

Lands' End tote bag
melissamn / Shutterstock

According to CreditRiskMonitor data, eight companies had a FRISK score of 2, representing between 4 and 9.99 percent insolvency per retail dive. These primarily include clothing retailers such as Abercrombie & Fitch, Farfetch, Lands’ End, Stitch Fix, ThredUP and Torrid. Also at lower risk were private labels Big Lots and Steinhoff, which owns the mattress company.

Retail Dive included additional data from Creditntell, a consulting firm that takes credit ratings into account when making forecasts. According to this company, Bed Bath & Beyond, Tuesday Morning, Party City, and Rite Aid are actually in trouble, as are GameStop, Casper, and Jo-Ann Fabrics. These big retail chains are at risk of going under for good, new data shows

Sarah Y. Kim

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