The coronavirus crisis has forced a majority of retailers to close their doors temporarily. While some retailers have made due with curbside pickup, such as Kohl's, or other means, some retailers are severely struggling. Though many were already struggling before COVID-19, the lockdown has only made things worse.
Every day that the following retailers are closed, the bigger the chances they won't survive the pandemic. JCPenney and Forever 21 are hanging on by a thread, where as Sears and Kmart are waiting for the final nail in the coffin.
Let's take a look at which major retailers may not re-open after the coronavirus lockdown.
Over the past few years, the only time that JCPenney reported a profit was during the holiday season, though even last holiday season was fairly weak.
Going further, back on April 15th, JCPenney failed to make a $12 million interest payment, which prompted a 30-day grace period before potential default. Typically, skipping a bond payment as a means to preserve liquidity is a step before bankruptcy filing.
In total, JCPenney has about $4 billion of long-term debt and a $105 million bond payment due in June. Yet, their sales are set to decline more than 25% in 2020.
Back in 2019, the retailer closed 27 stores and ended their sales of appliances and furniture. This allowed the company to re-focus on compelling apparel and merchandise. With the looming COVID-19 temporary closures, the company is running out of time to regain its footing. In fact, the chain has already announced six permanent closures, so far.
Back in September, Forever 21 filed for Chapter 11 bankruptcy and set about closing around 100 struggling stores. Then on February 19, the company sold its remaining assets to a group of investors run by Authentic Brands. While the investment company was deciding which stores to close and which to keep open, the coronavirus crisis emerged. Now, every remaining Forever 21 location is temporarily closed, and the pandemic threatens to derail any comeback.
Back in March, Neiman Marcus announced that they were closing a majority of their 22 Last Call stores. Now the store has temporarily closed 43 locations nationwide, and furloughed 14,000 employees due to COVID-19.
According to a Reuters report, the retailer is expected to file for bankruptcy as early as this week in an effort to ease its $4.3 billion in debt. By filing for Chapter 11, the company can remain in business while closing all underperforming stores. However, its fate after the filing is uncertain. While many businesses that file for bankruptcy don't simply go away, the retailer doesn't seem to have a clear plan for after bankruptcy.
Though it's been 14 months since the sibling chains were in bankruptcy, it was always hard to envision a return to glory before the pandemic. Now, with all remaining Sears and Kmart locations temporarily closed, it's even more unlikely that the companies will surivive.
Over the past 15 years, the retailers have closed more than 3,500 stores, and even narrowly escaped total liquidation back in February of 2019. Time is now running out again for both companies. In February 2020, 51 Sears and 45 Kmart locations were set to close, which left only 182 remaining stores.
Currently, J.Crew holds about $1.6 billion in debt. Before the coronavirus pandemic, the company was hoping to spin off their fast-growing denim brand, Madewell, in order to help pay down that debt. However, now after the virus, those plans are in jeopardy. If the company cannot take their IPO public, then a more dire restructuring will be needed. With their entire lineup of stores temporarily closed due to COVID-19, the chain's future is becoming murkier by the day.