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Bankruptcy List Grows as Retail Spirals from Too Much Debt

As of the first week of February in both 2017 and 2018, three major retailers had declared bankruptcy. While an argument can be made that the most troubled retailers have already shut their doors and filings will slow down in 2019, the list of filings this year appears to be growing at a more rapid pace. As of 2/6/2019, the list of major retailers to file includes: 

- Things Remembered (February 6)

- FullBeauty Brands (February 3)

- Charlotte Russe (February 3)

- Gymboree (January 16)

- Shopko (January 16)

- Innovative Mattress Solutions (January 11)

- Beauty Brands (January 6)

During a recent earnings call, the CEO of Simon Property Group, the largest real estate investment trust by market capitalization, revealed that the President and COO is currently on his 200th unsecured creditors' committee. The CEO also stated, "We have a long list of retailers that have struggled. 80% to 90% of that list have been over-levered, so they couldn't turn left or right. You just can't have too much leverage in any industry and any business."

Debt continues to be a good predictor of who will be next to go. As more fall, the cascading effect could be ominous and ultimately be systemic on more robust retailers that may otherwise be able to push through the disruption. While time will tell, it is worth considering that with the downfall of Sears, and potentially JC Penny, the drop in traffic to the in-line mall retailers that depend on foot traffic big- box retailers draws could be a decimating blow.

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