The year 2020 has been a difficult one for many businesses, with more than three dozen retailers filing for bankruptcy. This marks an 11-year high, and the oldest department store chain in the country, J. C. Penney, was one of them.
The company had been struggling for years before the pandemic, but the Covid crisis only exacerbated their problems. Penney employed around 90,000 full- and part-time workers in February, but has since closed more than 150 locations. The luxury department store Neiman Marcus also filed for Chapter 11 bankruptcy protection in early May. To reduce their debt and strengthen their finances, they created a new board of directors and Geoffroy van Raemdonck remains CEO. Neiman Marcus is hoping to take advantage of the strong upturn in the luxury market as high-income consumers spend more on themselves while travel and other social activities are suspended. Guitar Center, which began its business in Hollywood in the 1950s selling organs for the home, was also affected by the pandemic.
With shoppers turning to the Internet to buy instruments and sheet music, Guitar Center filed for Chapter 11 in late November. Tailored Brands, owner of Men's Wearhouse and Jos. Bank, filed for Chapter 11 in August. The company had been struggling with a years-long drop in sales before the pandemic, but the temporary store closures caused by Covid-19 harmed them even further. Tailored Brands announced plans to close up to 500 stores over time and reduced their corporate workforce by 20%.Ascena Retail Group, owner of Ann Taylor and Lane Bryant, also filed for Chapter 11 bankruptcy protection in July.
The company had been making an increasing effort to grow their business as more women went to fast-fashion retailers such as H&M and Zara, but the pandemic caused them to struggle even more. Sycamore Partners acquired Ascena Retail Group and is committed to keeping most of their remaining stores open to the public. However, they will have to work to win over a generation of younger consumers looking for comfortable, casual clothing. GNC filed for Chapter 11 in June after previous attempts to reduce their number of stores and shift investments to digital technology failed. The retailer said that the pandemic only exacerbated their financial pressure of recent years and they hoped to reduce their debt by closing between 800 and 1200 stores while looking for a buyer. Preppy clothing company J. Crew also filed for Chapter 11 bankruptcy protection in early May after being criticized for losing contact with their once-loyal customers.
J. Crew hoped to spin off its Madewell brand into an IPO that could have helped pay its debt burden, but faced rejection from creditors. In September, J. Crew emerged from bankruptcy with 181 J. Crew stores, 140 Madewell stores, and 170 factory outlet locations still open.
Brooks Brothers, one of the oldest clothing chains in the country, also filed for Chapter 11 in July due to expensive leases resulting from their real estate expansion over the years and fewer men buying suits and ties due to the pandemic. Discount clothing and accessories chain Stein Mart applied for Chapter 11 protection in August and liquidated all 281 stores due to sales dropping during temporary store closures in spring. Home goods chain Pier 1 Imports also filed for Chapter 11 in mid-February after nearly 60 years in business when plans to find a buyer were unsuccessful due to worsening pandemic conditions. Closing sales at Pier 1's hundreds of stores temporarily stalled until spring and summer when local lockdowns were lifted. Despite all these bankruptcies this year, new filings continue to fall 14 years later.
