Posted on 06/24/2022 9:08:45 AM PDT by Ebenezer
The retail industry is facing a potential tidal wave of bankruptcies later this year as rising prices begin to dent consumer demand and stores begin to contend with bloated inventories.
CNBC reports the potential for an economic recession is also still looming. The first domino may have already fallen as beauty giant Revlon filed for Chapter 11 bankruptcy protection last week. Now consumers and shareholders alike are wondering who’s next.
“Retail is in flux,” Perry Mandarino, co-head of investment banking and head of corporate restructuring at B. Riley Securities, told CNBC. “And within the next five years, the landscape will be much different than it is today.”
The retail industry saw a dramatic pullback in restructurings last year and early this year as federal stimulus funds provided cash infusions to companies and consumers. The pause came after the beginning of the pandemic saw several large companies—including JCPenney, Brooks Brothers, J. Crew and Neiman Marcus—file for bankruptcy.
The Revlon bankruptcy brought the number of retail bankruptcies this year to four, the lowest number of retail bankruptcies in more than a decade. However, if inflation continues to rise and the country hits a recession that number could top the 52 retail bankruptcies during the first year of the pandemic.
“What you saw in 2020 was a tremendous amount of restructuring activity getting pulled forward,” Spencer Ware, managing director and retail practice leader at Riveron, said. “Then we got from 2020 through today with a tremendous amount of stimulus. What’s going to happen now? It’s a bit of a mixed bag.”
An analysis by Fitch Ratings shows the consumer and retail companies in the most danger of bankruptcy include mattress maker Serta Simmons, cosmetics line Anastasia Beverly Hills, and clothing chain Men’s Warehouse.
The latest retail sales data show consumers have pulled back spending on retail and food service by 0.3% in May versus April. Furniture and home furnishings, electronics and appliance retailers, and health and personal care retailers all saw declines during the same period.
A new pizza place opened around the corner from me a few months ago and I couldn’t wait to try it, so my wife surprised me one night with a large 3 or 4 item pizza and it was really good. I asked her how much it was, and she said it came to 37.00. I nearly fell out of my chair. I can’t believe a large pizza could cost so much and she explained that the “base” pizza was only like $18, but they charge like $4 per topping.
The pizza was really good, but never again for me. I don’t expect them to be around that long with those prices in this economy.
People have less disposable income and everything costs more.
What could possibly go wrong?
Another Fed rate hike in July?…
Also noting that new or standard chain restaurants have altered to better serve take outs and smaller in house eating areas when they build or remodel.
JC Penney was on the way out long before covid.
I do a big grocery run about every 6 weeks - this week the price differences from six weeks ago was marked and very apparent.
Also noted are package sizes much smaller.
According to my mom in Florida, prices at Publix is now at Whole Foods levels.
Building back better, right Sleepy Joe?
Consumers reduce spending? With gas at 6 bucks a gallon? What a shocker!
..Like the White House said, Americans need to have two jobs to sacrifice for Ukraine and to fight Putin!
Maybe people are waking up and realizing that they really don’t need so much “stuff”.
Bingo...Unless it’s absolutely necessary, we aint buying...No sale!
A buddy has several gift cards to various restaurants in the area. He is trying to use them up before they go out of business.
Maybe. I'm still seeing a lot of activity at Home Depot, but not as much as before. Was there yesterday and bought over 1000 pounds of rock for a backyard project, got 1/3rd of the 50-pound bags for $1 each because they were open. They were offering grass sod for free if anyone would take it; but there are water restrictions here so we and others declined taking sod.
They NOT spending less...just way more on essentials...rent, food and gas...
They NOT spending less...just way more on essentials...rent, food and gas...
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