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The Biggest Bankruptcies in Retail History

Over the years, the retail industry has undergone a transformation — boosted by the acceleration of e-commerce, a decline in visits to brick-and-mortar stores, the proliferation of digitally native brands and the adoption of new omnichannel technologies.

While some fashion titans rode the wave to success, other chains were pushed to the brink — and some even faced collapse. From seeking Chapter 11 protection to undergoing companywide reorganization, companies had struggled to stay alive even before the coronavirus pandemic swept the United States.

According to a recent report from professional services firm BDO USA, 29 retailers — the majority of them concentrated in the apparel and footwear spaces — have already filed for bankruptcy in the year to date, meaning 2020 is on pace to rival the post-Great Recession 2010, which recorded 48 filings. As the sector experiences one of its most cataclysmic years in modern-day history, FN recounts the biggest retail bankruptcies of all time.

JCPenney

After struggling for several years amid declining sales, numerous leadership changes and increased digital competition, J. C. Penney Company Inc. sought Chapter 11 protection on May 15. According to a Securities and Exchange Commission filing in mid-September, its sales tumbled 44% to $1.4 billion during the period ended Aug. 1. It also widened its net losses to $398 million, or $1.23 per diluted share, compared with the prior year’s losses of $48 million, or 15 cents per share. The disappointing results — similar to those posted by other retailers as the COVID-19 health crisis forced the temporary closures of nonessential stores in March and April — came one day after the chain inked a deal to sell its business to mall giants Simon Property Group Inc. and Brookfield Property Partners LP for $1.75 billion.

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Neiman Marcus

Neiman Marcus emerged from bankruptcy on Sept. 25, when it announced a new name: Neiman Marcus Holding Company Inc. At the time, it revealed that it had eliminated more than $4 billion of existing debt and upwards of $200 million of cash interest expense annually, with no near-term maturities. The announcement came less than five months after it filed for Chapter 11 protection following years of financial pressures stemming from a private equity buyout. Moving forward, it expects to lay off an unspecified number of employees at its namesake department store, Last Call and Bergdorf Goodman outposts as part of its reorganization plan.

J.Crew

On May 4, J.Crew Group Inc. became the first major American fashion retailer to declare bankruptcy amid the coronavirus pandemic. In late August, it received approval for its second amended restructuring plan, clearing the way for its $1.6 billion debt-for-equity swap, as well as providing it $400 million in an asset-based lending facility and more than $400 million in new term loans. The company officially completed its financial restructuring process on Sept. 10, when Anchorage Capital Group LLC became its majority owner. It is also parent to Madewell, which has withdrawn its plans for an initial public offering after negotiators were said to be unable to agree on terms.

Lord + Taylor

Le Tote Inc. announced in late August that Lord + Taylor, the oldest department store in the U.S., would shut down all of its 38 stores after a 194-year run. It came just weeks after the company filed for Chapter 11 protection, sharing that it owed millions of dollars to 10 companies, as well as hundreds of thousands to at least 20 other firms. In April, the retailer saw the bulk of its executive team resign — including president Ruth Hartman — while its owner confirmed that it had implemented “significant companywide layoffs … with only key employees remaining to preserve the business.” Lord + Taylor was sold to Le Tote for $75 million last year in August; previous owner Hudson’s Bay Company had struggled for some time to revive the brand and even shuttered last year its century-old flagship on New York’s storied Fifth Avenue, as well as another 10 of its 48 outposts.

Brooks Brothers

Two months after going bankrupt (in July), Brooks Brothers was acquired by Authentic Brands Group LLC and SPARC Group LLC — a venture created by the brand management firm and mall giant Simon Property Group Inc. At least 125 of the storied American clothier’s brick-and-mortar units are expected to continue operating as part of the agreement. (It has more than 500 outposts around the world.) Last year, the retailer made more than $991 million in revenues — about a fifth of which was online. SPARC now assumes the role of core licensee of the company, while ABG has purchased its intellectual property and will oversee all licensing partnerships, new business and brand development.

Forever 21

The teen mall staple went bankrupt last year in September. At the time, it had employed 43,000 people and recorded $4.1 billion in annual sales at its peak. However, the stalking-horse bid from the consortium of buyers valued it at just $81.1 million in 2020. In February, Forever 21 announced that it had new owners: Authentic Brands Group LLC, Simon Property Group Inc. and Brookfield Property Partners LP. As part of the acquisition, ABG and Simon snapped up 37.5% of the fast-fashion retailer, while Brookfield took control of the remaining 25% of its intellectual property and operating businesses.

Sears

The once-dominant Sears Holdings Corp. filed for Chapter 11 protection in October 2018 after failing to turn a profit since 2010. Through namesake hedge fund ESL Investments Inc., ex-CEO Eddie Lampert had extended $2.4 billion in various secured financings to the retailer over the years. The billionaire executive won court approval early last year to buy the company out of bankruptcy in a $5.2 billion deal that rescued the Illinois-based chain from liquidation. The buyout saved 425 stores and 45,000 jobs.

Payless ShoeSource

Payless ShoeSource filed for bankruptcy not once, but twice in the past couple years: In February last year, the everyday low-price family footwear chain — following a seemingly successful emergence from Chapter 11 in 2017 — announced that it would liquidate all 2,500 of its North America-based locations, costing around 16,000 people their jobs, marking its second bankruptcy in two years. However, several months after it exited from that Chapter 11 process with new management, the company went live with a new e-commerce site, with plans to debut its first new brick-and-mortar location in Miami this November.

Toys ‘R’ Us

Saddled with a hefty debt load and facing tough e-commerce competition, Toys “R” Us sought Chapter 11 protection in September 2017. Six months later, it announced that it would shut down its entire brick-and-mortar fleet in the U.S. and the U.K. The bankruptcy rippled across the retail industry and left billions of dollars in holiday toy sales up for grabs. Target — one of the businesses that battled for a portion of the toy maker’s market share — partnered with Toys “R” Us’ parent company, Tru Kids Brands, in October to facilitate the relaunch of ToysRUs.com. However, in August it was reported that the retailer’s digital and fulfillment services are now in the hands of Amazon.

Nine West

In April 2018, Nine West Holdings Inc., parent to its namesake label, Anne Klein, Bandolino and other fashion names, filed for Chapter 11 protection and closed all of its Nine West standalone stores. While it managed to trim its pre-bankruptcy debt obligations by more than $1 billion, the company ultimately sold its Nine West and Bandolino businesses during a court auction two months later to Authentic Brands Group LLC, which paid $340 million for the assets. Just short of a year later, Nine West Holdings emerged from bankruptcy with remaining brands that include Anne Klein, One Jeanswear Group, The Jewelry Group and Kasper Group. Under the new name, Premier Brands Group Holdings LLC, the company maintains liquidity of more than $100 million to support its operations and future growth initiatives.

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