The coronavirus pandemic has had a devastating effect on the U. S. retail industry, with more than three dozen retailers, including some of the country's oldest department store chains, filing for bankruptcy this year. J.
C. Penney, Ascena Retail Group, Tailored Brands, Neiman Marcus, Guitar Center, Stage Stores, Pier 1 Imports and Brooks Brothers are just some of the companies that have declared bankruptcy due to the pandemic. Penney was already struggling with debt before the pandemic hit, but the Covid crisis exacerbated their problems. The luxury department store chain filed for Chapter 11 in early May and eliminated billions of debts.
Neiman Marcus created a new board of directors and Geoffroy van Raemdonck remains CEO. The retailer hopes to take advantage of the strong upturn in the luxury market as high-income consumers spend more money on themselves while travel and other social activities are suspended. Guitar Center began its business in Hollywood in the 1950s selling organs for the home and grew to become a leader in the music category. However, the temporary store closures caused by the pandemic harmed the company as shoppers turned to the Internet to buy instruments and sheet music.
The retailer filed for Chapter 11 in late November and reduced its corporate workforce by 20%. Tailored Brands, owner of Men's Wearhouse and Jos. A Bank, filed for Chapter 11 in August hoping to reduce its debt and strengthen its finances which were eroded by the pandemic. The company announced plans to close up to 500 stores over time and reduced its corporate workforce by 20%.
Ascena made an increasing effort to grow her business as more women went to fast-fashion retailers such as H&M and Zara, to chains with discounted prices such as TJ Maxx and Ross Stores, and even to Target, to buy clothes. Sycamore is committed to keeping most of Ascena's remaining stores open to the public but will have to work to win over a generation of younger consumers looking for comfortable, casual clothing. J. Crew filed for Chapter 11 in early May marking the first major retail bankruptcy of the pandemic. The company had already been struggling with a heavy burden of debt and sales problems and had been criticized for losing contact with her once-loyal customers.
Crew also hoped to spin off its Madewell brand into an IPO that could have helped pay its debt burden but faced rejection from creditors. Brooks Brothers, one of the oldest clothing chains in the country, filed for Chapter 11 in July due to expensive leases resulting from their real estate expansion over the years and because of fewer men buying suits and ties due to social distancing measures. The discount clothing and accessories chain Stein Mart applied for Chapter 11 protection in August and liquidated all 281 stores due to their sales selling out during temporary store closures in spring. When declaring bankruptcy, companies seek a new owner while starting to close dozens of stores due to health crisis-related issues. Despite slow reopening of the economy, social distancing measures are still affecting capacity of restaurants and stores creating long-term problems. Do you have any confidential news? We want to hear from you. Get this in your inbox and learn more about our products and services.
