Rating agency Fitch lists 8 retail companies that it thinks will be bust within the next 12 months…and Sears is at the top!
Fitch’s expectation of increasing retail defaults stems from increased discounter (including off-price and fast-fashion apparel) and online penetration, and shifts in consumer spending toward services and experiences. All of these factors have created a highly competitive retail environment and accelerated mall traffic declines. Retailers have also suffered from the ebb and flow of brand popularity. Negative comparable store sales and fixed-cost deleverage have led to negative cash flow, tight liquidity and unsustainable capital structures.
Going back to Payless, the company was listed on Fitch’s Loans of Concern list, which is a compilation of issuers with a significant risk of default within the next 12 months. And, just to make the tracking of future defaults easier, Fitch also provided the list of eight other retailers with term loan debt totaling nearly $6 billion, which are also its concern list, and are most likely to be in default in the not too distant future. They are as follows:
- Sears Holdings Corp (roughly $2.5 billion);
- 99 Cents Only Stores LLC;
- Charming Charlie LLC;
- Gymboree Corp.;
- Nine West Holdings Inc.;
- NYDJ Apparel LLC;
- rue21, Inc.; and
- True Religion Apparel Inc.
Sources: ZeroHedge, Fitch