Daily Management Review

COVID-19 pandemic accelerates pace of U.S. retailers bankruptcies


The COVID-19 pandemic has significantly worsened the situation of traditional retailers in the United States, which were already having difficulties. According to The Wall Street Journal, citing a report from research firm BDO USA, 18 retail chains in the United States filed for bankruptcy in the first six months of 2020 alone.

Phillip Pessar
Phillip Pessar
Companies filed applications for restructuring in the context of protection from creditors under Article 11 of the US bankruptcy law - mainly department store chains (Neiman Marcus, JC Penney, etc.), household goods chains (Pier 1 Imports and Tuesday Morning) and others traditional retailers. In the second half of the year, the pace of bankruptcies accelerated: in July-August alone, applications were filed from 11 retail companies, mainly selling clothes and shoes. Thus, in the first eight months of the year alone, more retailers (29) went bankrupt in the United States than in the entire last year (22). At the same time, 2019 in the United States has already set a record for the number of closed stores: a total of about 9.3 thousand retail outlets were actually closed or announced imminent closure, which is 50% more than in 2018.

In the past two years, the country's once-largest U.S. retailers have filed for bankruptcy or cut hundreds of outlets due to growing competition from online retailers like Amazon or retailers that are more adaptable to changing consumer preferences like Walmart.

Now BDO USA experts fear that due to the coronavirus pandemic, which has accelerated the outflow of consumer activity to the Internet, 2020 may become one of the worst in the recent history of the US retail market, coming close to or even overtaking 2010 in terms of the number of bankruptcies (48 bankruptcies). At that time, the country's retail sector suffered from the economic downturn caused by the 2007-2009 financial crisis.

source: wsj.com