Mounting Losses Plague Retailers
2017 and 2018 were bad years for retailers, but it looks like retailers have not turned the corner yet.
Based on announced store closures in 2019, the retail crunch continues unabated. The competition retailers face from discount stores and, in particular, e-commerce, has changed the retail landscape
Now, even established retail brands are not safe anymore. Many are either shutting down stores in unprofitable locations or going out of business entirely.
Well Established Brands That Went Bankrupt in 2019
A string of well established retail brands have already shut down shop in 2019. According to a Business Insider report
, some of the brands that went bankrupt in 2019 include:
- Payless ShoeSource - US-based shoe retailer
- Roberto Cavalli - the US unit of this Italian fashion retailer went bust in 2019
- Z Gallerie - furniture retailer
- Kona Grill - sushi restaurant
- Diesel - jeans retailer
- Beauty Brands - personal care product retailer
While these are just a small sample in a sea of retail closures, they put a face to a calamity that awaits many more retailers.
Strained Finances at Retail Stores
The case of Roberto Cavalli in the US is particularly insightful as it sheds light on the circumstances under which these retail closures have come about.
Italian designer Roberto Cavalli founded the fashion house in 1975. Over the next few decades, the brand would grow to a worldwide high fashion powerhouse, with stores across Europe and the US.
Since 2013, however, as Fashion United reported in May 2019
, Roberto Cavalli has been operating at a loss. In 2018, the company recorded a $17.8 million loss, while revenues continued a slide begun in 2015.
Unable to service debts and ordinary operating expenses, the US arm of the company filed for bankruptcy in April 2019.
The UK Retailers Closing Shop in 2019
Within the UK, many retailers have been forced to downsize or file for bankruptcy on the back of similar challenges. Below, we look at some of the companies closing shop in 2019.
is one of the UK’s iconic retailers but the business has faced challenges of late. In May 2019, The Guardian reported
that about one in ten Burberry stores would be closed as part of restructuring efforts. For now, the company has staked its future on an upscale focus to compete with the likes of Dior
The Money Shop
The Money Shop is a pawnbroker store which used to have up to 500 stores some years ago. The Times announced that the company
planned to sell off or close its remaining 97 stores. The company had a financial loss in 2018 of around £87 million, which followed close on a £59 million operating loss in the previous year.
Among the retailers closing shop in 2019 is Bathstore, a national retailer of bathroom fixtures. The retailer went into administration in June 2019
, with administrators noting that the company had failed to find a buyer. The company had run significant losses in the last few years and owed huge amounts of money.
Founded in 1813, Debenhams
is one of the UK’s largest and oldest high street brands. The company has struggled financially in the last few years, with a record loss of £491.5m in 2018
. The company has been closing stores across the country amidst uncertainty over its future.
L K Bennett
L.K. Bennett, the luxury fashion retailer founded by designer Linda Kristin Bennett, went into administration in March 2019. The Financial Times chronicled how
mounting losses and declining sales created a death spiral for the retailer. Financial infusions from the founder were not enough to get the business profitable again, leading to administration in 2019.
Across The Pond: US Retailers Downsizing
While retail closures in the UK have continued at an alarming pace, the situation has not been that much better in the US. CB Insights blamed a variety of factors
for continued US store closures and bankruptcies, including:
- Competition from Amazon
- Retailers’ inability to adapt to changes in the market
- Large amounts of debt in the retail sector
Below are some of the brands closing shop in the US.
Womenswear and lingerie manufacturer Victoria’s Secret
is among the big name American brands that are downsizing. According to a report by ABC7 News
, the company saw a 7 percent decline in sales in 2018. Up to 53 stores would now be cut to adjust to the constrained operating outlook.
has a nationwide footprint but the retailer’s continuing struggles have seen it downsizing. In 2019, based on a Business Insider report
, the company planned to close some of its stores in 13 states.
, which went into bankruptcy in 2018, has re-emerged in 2019 with a leaner structure. According to the Chicago Tribune
, Sears has shed all but 223 of its stores and 202 Kmart stores. When it went into bankruptcy, the company had nearly 700 stores.
Abercrombie & Fitch
In Search of a Soft Landing for Retail
The struggle is not over yet for retailers on both sides of the Atlantic. With long-running businesses downsizing or filing for bankruptcy in 2019, retailers can’t afford to be complacent. The challenges that struggling retailers face are now well-documented. It’s more than just one thing. A perfect storm of competition from online retailers, including Amazon, mounting debt, and changes in consumer shopping habits spell tough times ahead. Where the retail industry goes next is anyone’s guess, but the final chapter in this story has not been written yet.