At a certain point, and perhaps it has already come to pass for some, the acceleration in retail bankruptcies may cause those watching closely to move beyond suprise at hearing of the next filing to attempting to predict who will be next. Like 2018, those who are perhaps considered experts on the retail sector have predicted that bankruptcies will slow down. A senior retail analyst from Debtwire was recently quoted in Retail Dive saying, "They will slow down if for no other reason than a lot of the most troubled retailers have already filed bankruptcy like Toys R Us, Bon-Ton, and of course Sears." For whatever reason, each year many of the pundits seem to get it wrong. As of the end of March 2018, five brick-and-mortar retailers had declared bankruptcy. With the March 11th Chapter 11 announcement from Z Gallerie, ten retailers have declared bankruptcy so far this year. The list includes:
Z Gallerie - March 11
Diesel USA - March 5
Payless ShoeSource - February 18
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
And just this week Modell's Sporting Goods ominously announced that they had retained a financial adviser to explore restructuring options. Tremendous debt, no sound e-commerce strategy and changing consumer behavior have proven to be the overwhelming cause of the demise in brick-and-mortar retail. For those in the turnaround and inventory monetization world, perhaps holiday turkeys are in order for private equity sponsors who never saw this level of disruption coming, and Amazon for helping effectuate the pace.