Tags: S&P | Sears | Retailers | Default | Debt

S&P Warns: Sears, 9 Other Public Retailers Most in Danger of Default

S&P Warns: Sears, 9 Other Public Retailers Most in Danger of Default
(AP/Elise Amendola)

By    |   Friday, 28 April 2017 09:52 AM

Researchers at S&P Global Market Intelligence recently released a list of 10 publicly traded retailers they consider most at risk of default within the next 12 months.

The firm’s analysis is based on industry factors, such as intensity of competition and barriers to entry, as well as company-specific metrics, the Wall Street Journal reported.

“The shift to online shopping has left a lot of financial distress in its wake,” Jim Elder, director of risk services at S&P, wrote in a research note. “The results from the first quarter do not suggest that a quick recovery is on the horizon,” WSJ.com quoted Elder as saying.

“The number of bankruptcies so far this year has already come close to the total in 2016, with 14 retailers filing compared with 18 last year, according to S&P Global Market Intelligence. Payless Inc., RadioShack Corp. and Limited Stores Co. are among those that have sought relief from creditors,” the Journal explained.

Here’s S&P’s ranking:

  • Sears Holdings Corp.
  • DGSE Companies Inc.
  • Appliance Recycling Center of America Inc.
  • The Bon-Ton Stores Inc.
  • Bebe Stores Inc.
  • Destination XL Group Inc.
  • Perfumania Holdings Inc.
  • Fenix Parts Inc.
  • Tailored Brands Inc.
  • Sears Hometown and Outlet Stores Inc.

Retailers reportedly are filing for bankruptcy protection at a disturbing rate that's flirting with recessionary levels.

Meanwhile, a steady stream of store closures continues to haunt the battered American retail industry.

“It's only April, and nine retailers have already filed for bankruptcy since the start of the year — as many as all of last year,” Business Insider explained.

"2017 will be the year of retail bankruptcies," Corali Lopez-Castro, a bankruptcy lawyer, told Business Insider. "Retailers are running out of cash, and the dominoes are starting to fall."

More than 3,500 stores are expected to close over the next several months, BI reported.

Annual retail bankruptcies peaked at a total of 20 in 2008. The U.S. could hit that dismal milestone by September if the rate is sustained, CNBC has reported.

The pace of store closings this year is already ahead of 2008, that measurement’s most recent peak, according to Credit Suisse Group AG.

Steve Beaman, chairman the Society to Advance Financial Education, recently told Newsmax TV that mass store closures and layoffs by Sears, Macy’s and Kmart only prove that the retail industry continues to undergo a sea change because of online shopping.

And this seismic shift may soon extinguish a cultural landmark of the recent past – the American shopping mall.

JD Hayworth asked Beaman on Newsmax TV's "America Talks Live" if malls are a relic of a bygone era.

“My personal opinion is they are,” he said. He cited many many requiring adults to chaperone those under the ages of 21 or 18.

“So we're already going to see the demise of it being the hang out for kids and I think that will change the retailing habits of it. The overall security concerns of the brick-and-mortar retailers is going to become a draining cost on them. So, they're going to think more and more let's go to the internet,” he said.

To be sure, Newsmax Finance Insider Jeff Snyder said the retail malaise just may be indicative of a deeper economic malady.

"When analyzing the shift in consumer preferences it is usually presented as “all or nothing,” meaning that shoppers leaving brick-and-mortar stores are bestowed with a convenience option that they are exercising," Snyder wrote for Newsmax Finance.

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).
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Number of bankruptcies so far this year has already come close to 2016 total
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Friday, 28 April 2017 09:52 AM
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