2020 Retail Likely to Have the Most Bankruptcies and Store Closures Ever In One Year

 Pandemic temporary store closures, social distancing requirements, e-commerce boom and supply chain disruption in the first six months of this year. BDO's bi-annual bankruptcy update counts18 retailers that headed to bankruptcy court in the first half of the year pllus another 11 in July through mid-August -- 27 so far this year, compared to 17 in 2019. (BDO counts some businesses, like Gold's Gym, as retailers.)

On pace with 2010, after the Great Recession, with 48 bankruptcy filings by retailers, according to BDO's report.  Defaults through mid-August were concentrated in apparel and footwear, home furnishings, food and department stores, including: 

Pier 1,
J. Crew,
Neiman Marcus,
Stage Stores,
J.C. Penney,
Tuesday Morning,
GNC,
Lucky Brand,
RTW Retailwinds (New York & Co.),
Brooks Brothers,
Ascena (Ann Taylor, LOFT, Lane Bryant,
                    Justice, Catherines),
 Le Tote (Lord & Taylor),
Tailored Brands (Men’s Wearhouse,
        Jos. A. Bank, Moores Clothing, K&G)
Stein Mart.


"In short, 2020 is on track to set the record for the highest number of retail bankruptcies and store closings in a single year," BDO wrote. "Based on the trends set through mid-August, our expectation is that more retailers will struggle to navigate the effects of the pandemic — particularly those that are highly levered and mall-based."

The pandemic sped up the downward spiral of malls. "[T]he closings of anchor and other stores in shopping malls will likely make visits to them less appealing and depress mall traffic overall, unless landlords are able to quickly fill these vacancies with attractive alternatives,"    per the report.

By BDO's measure, bankrupt retailers alone have announced nearly 6,000 store closings this year, more from January through mid-August "than the record 9,500 stores that closed throughout 2019," and most of them in malls.

But more than 15 retailers (including Macy's, Bed Bath & Beyond and Gap) outside of bankruptcy court have announced a total of 4,200 closures, researchers said.

High hopes for the fourth quarter could prevent more retailers from hurtling toward bankruptcy in the second half of the year, BDO said. "To stay competitive, brick-and-mortar stores should assume touchless shopping options such as curbside pick-up and self-checkouts are here to stay, and apparel retailers should be re-imagining what the fitting room experience will look like post pandemic,"  they wrote.