Along with other local attorneys, I was recently quoted in The Lane Report about predictions for 2017 in various economic sectors and in my own business. At the time, one of those I cited as being troubled was the retail sector.
Little did I envision how quickly the @#$% would hit the fan. The last 30 days have seen a rash of large retail bankruptcy filings, with a pretty dismal outlook for finding solutions to their lagging sales revenues, overgrowth of brick and mortar locations, and operational losses, which lenders and private equity partners will no longer tolerate.
Never forget my young shopping grasshoppers: Things are not always as they seem. Big-box and stores with outdated inventories are in a world of hurt. There are more bankruptcies to follow, or many more losses to be absorbed by (un)happy investors behind the curtain.
- March 6: HHGregg filed chapter 11 in the Southern District of Indiana, Case No. 17-bk-01302. Plans to close at least 88 stores.
- March 8: RadioShack filed (again) (a/k/a “Chapter 22” in my world) in Delaware, Case No. 17-10506.
- March 10: Gander Mountain filed chapter 11 in Minnesota, where its corporate headquarters are located in St. Paul. Gander Mountain had been on an aggressive growth spurt, opening many new locations across 26 states. Many now to close. Case No. 3:17-bk-30673.
- April 4: Payless Shoes and 28 affiliates filed chapter 11 in Eastern District of Missouri, Case No. 4:17-bk- 42257, with plans to close 400 stores.
These are not “mom and pops”— these are large filings that affect many employees, many vendors, and many landlords, in addition to the large equity funds who are going to take large monetary losses, often playing with other people’s money.
Happy Spring Shopping. Better hurry up!
By: Laura Day DelCotto, Esq.