Retail bankruptcies, liquidations and store closings in the U.S. reached records in the first half of 2020 as the Covid-19 pandemic accelerated industry changes, particularly the shift to online shopping, according to according to a report by professional-services firm BDO USA LLP.
In the first six months, 18 major retailers filed for chapter 11 protection, mostly concentrated in apparel and footwear, home furnishings, grocery and department stores, according to the report. They include department-store operators Neiman Marcus Group Ltd., J.C. Penney Co.
and Stage Stores Inc.
, home-goods retailers Pier 1 Imports Inc.
and Tuesday Morning Corp. and vitamin seller GNC Holdings Inc.
From July through mid-August, 11 more retailers filed, including apparel retailers Lucky Brand Dungarees LLC, Brooks Brothers Inc., Ann Taylor parent Ascena Retail Group Inc.
, Stein Mart Inc., and Men’s Wearhouse and Jos. A. Bank parent Tailored Brands Inc.
This year is on pace to rival 2010, when 48 retailers filed for bankruptcy in the wake of the 2007-09 recession, BDO said. Retail bankruptcies in 2020 have already surpassed the 22 such filings recorded last year.
“This is almost certainly the worst year in recent history for retail,” said Kyle Sturgeon, a managing partner at Atlanta-based turnaround advisory firm Meru LLC.
Government-mandated store closures and social-distancing measures have intensified challenges that were facing bricks-and-mortar retailers before the pandemic, according to BDO.
Consumers stuck at home due to the pandemic are buying more online than ever, the report said. That trend comes on top of excessive debt, store saturation, high unemployment and changing shopper behaviors. Demand for business attire and outfits for social occasions, in particular, has cratered.
High rates of bricks-and-mortar store closures are expected to continue, BDO said. From January through mid-August, retailers had announced