“It’s A Perfect Storm”: List Of Retailers In Danger Of Bankruptcy Hits Record 22

Source: ZeroHedge.com
June 9, 2017

The US retail sector continues to sink at an alarming rate, and according to the latest iteration of Moody‘s list of retailers who are in danger of filing for bankruptcy, there are now 22 distressed retailers whose troubled financials the rating agency believes could make them potential bankruptcy candidates in the near future, up substantially from just two months ago, and topping the 19 recorded at the peak of the Great Recession.

According to Moody’s analyst Charles O’Shea, legacy retailers such as Sears, Neiman Marcus and others on the rating agency’s retail distress list, face a “perfect storm” and warned that “you’re on the Andrea Gail right now, and the water’s starting to get very choppy.” The worst could be yet to come as the Moody’s analyst writes that “the ranks of distressed retailers is set to keep growing over the next 12 to 18 months amid a secular shift in the industry.”

Moody’s list consists of all retailers which have ratings of Caa or lower. That number has grown to 22, or approximately 15%, of the firm’s retail and apparel universe. “When you’re down there in C-a land, bankruptcy is a real possibility,” O’Shea said.

“The majority of retailers remain fundamentally healthy,” said O’Shea, “But as select groups of retailers continue to deteriorate — in particular department stores and specialty retailers — we believe the distressed ranks will keep growing, fueled in part by distinct vulnerabilities within the B2/B3 retail population.”

Focusing on those retailers with imminent default risk, Moody’s adds that of 42 B2/B3 rated issuers (as of April 30, 2017), seven face $1.1 billion of maturities for asset-based loans and revolving credit facilities over the next year- elevating the risk of default for already-stressed and distressed issuers should the strong refinancing pace driving recent high-yield issuance recede. Such a risk is underscored by Moody’s US speculative-grade default forecast, which predicts a decline in the overall US speculative-grade default rate to 3% by April 2018 from 4.5% today, even as spec-grade retail and apparel default forecasts trend significantly higher, at 6.7% and 6.8%, respectively.

Some of the highliights from the latest Moody’s report

  • Competitive challenges are intensifying and the credit erosion among more challenged retail sectors and individual retailers is crystallizing rapidly as more issuers file for bankruptcy and miss payments
  • The competitive challenges weighing on earnings performance for bigger retailers like Amazon.com, Walmart Stores, Best Buy and Target will have potentially devastating ripple effects for smaller, more challenged retailers over the next several quarters
  • Common characteristics of retail and apparel companies with lower credit ratings include stressed liquidity, weak quantitative credit profiles, challenged competitive positions, sponsor ownership and erratic management structure
  • Liquidity is typically the driving force in the assessment of credit risk, and a key determinant in any drop into Caa/Ca territory. “Risk becomes more acute when a company is facing a meaningful debt maturity.”

Some names that figured previously on Moody’s list have already filed for Chapter 11 protoection: among them discount footwear company Payless ShoeSource and Rue21, a teen fashion retailer, both filed for bankruptcy recently, while Gymboree, a specialty seller of children’s apparel, missed its June 1 interest payment and is expected to announce its bankruptcy filing shortly.

While landing on the distressed list of “super fallen angels” is not a death sentence, recently JC Penney managed to crawl out of it, the probability that a company will end up in bankruptcy rather than get its financial in orders is orders of magnitude greater.  “There are companies that come out of that,” said O’Shea, who noted that iconic retailer J.C. Penney “was down there, and is now out,” with an improved rating.

Doing the math here, with one company “out” and everyone else eventually filing, restructuring lawyers are finally going to be busy after a nearly decade-long hiatus.

Below is the full list of deeply distressed retailers:

  • Boardriders SA  – sporting subsidiary of Quiksilver
  • The Bon-Ton Stores – parent of department store chain
  • Fairway Group Holdings – food retailer
  • Tops Holding II – supermarket operator
  • 99 Cents Only Stores – discount retailer
  • TOMS Shoes – footwear company
  • David’s Bridal – wedding dresses and formalwear seller
  • Evergreen AcqCo 1 LP – parent of thrift chain Savers
  • Charming Charlie – women’s jewelry and accessories
  • Vince LLC – clothing retailer
  • Calceus Acquisition – owner of Cole Haan footwear firm
  • Charlotte Russe – women’s clothing
  • Neiman Marcus Group – luxury department store
  • Sears Holdings – owner of Sears and Kmart.
  • Indra Holdings – holding company owner of Totes Isotoner
  • Velocity Pooling Vehicle – does business as MAG, Motorsport Aftermarket Group
  • Chinos Intermediate Holdings – parent of J. Crew Group
  • Everest Holdings – manages Eddie Bauer brand
  • Nine West Holdings – clothing, shoes and accessories
  • Claire’s Stores – accessories and jewelry
  • True Religion Apparel – men’s and women’s clothing
  • Gymboree – children’s apparel



Read More At: ZeroHedge.com

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BreakawayConsciousness

Zy Marquiez is an avid book reviewer, an open-minded skeptic, yogi, and freelance writer who regularly studies subjects such as: Consciousness, Education, Creativity, The Individual, Ancient History & Ancient Civilizations, Forbidden Archaeology, Big Pharma, Alternative Health, Space, Geoengineering, Social Engineering, Propaganda, and much more. His own personal blog is BreakawayConsciousnessBlog.wordpress.com where his personal work is shared, while TheBreakaway.wordpress.com serves as a media portal which mirrors vital information usually ignored by mainstream press, but still highly crucial to our individual understanding of various facets of the world. My work can also be found on https://steemit.com/@zyphrex.

2 thoughts on ““It’s A Perfect Storm”: List Of Retailers In Danger Of Bankruptcy Hits Record 22”

    1. Some need to be, and that makes sense. They (Big Business) also makes it monumentally harder for small businesses to compete with them. I don’t mind big corporations, but when they take surreptitious actions against mom and pop stores that’s just criminal. I do a lot of shopping online, although not all. Mostly for books and things that I can’t find in person. The bookstores here rarely ever have the books in my interests \: It’ll be interesting to see what the future holds for commerce….black markets are starting to rise in all shapes and sizes, as are many other ways of commerce which is good. The world needs choices. Monopolies are a plague on business.

      Liked by 1 person

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