The fashion and retail sector has been at the center of 2020’s bankruptcy wave — and overall U.S. filings are on track to hit a 10-year high as the coronavirus pandemic rages on.
According to new research from S&P Global Market Intelligence, 442 U.S. companies have filed for bankruptcy this year (as of Aug. 9). That exceeds the amount of filings during any comparable period since 2010 — and the number is 27% higher than the same period in 2019. The analysis accounts for public or private companies with public debt, along with other criteria.
Not surprisingly, 85 companies that have gone bankrupt, including J. Crew, Neiman Marcus, Lord & Taylor and JCPenney, come from the consumer sector — which leads all industries in terms of activity.
Tailored Brands Inc. — the parent of Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G Fashion Superstore brands that filed for Chapter 11 protection this month — ranks as one of the three largest bankruptcies of the year, according to the report.
As the pandemic reveals deep problems and mounting debt at brick-and-mortar operators in all industries — travel companies and regional banks will be vulnerable in the back half of the year, according to the report.
The report noted that some bankrupt companies, like JCPenney, are attracting interest from private equity players. The Plano, Texas-based retailer is moving forward with a going-concern asset sale, and Sycamore Partners is said to be one of the interested parties. JCPenney said it has received multiple bids and expects to complete a deal by this fall under an expedited process.
Authentic Brands Group, another active acquirer of distressed businesses during the past few years, is said to be considering a buyout of the Ann Taylor, Loft and Lane Bryant parent, which filed for Chapter 11 protection in July.