BDO: Retail bankruptcies and store closings climb in first half – Furniture Today

NEW YORK First the bad news: Retailers across many sectors closed more than 7,000 stores in the first half and the pace of retail bankruptcies picked up during that period, according to BDOs Bi-Annual Bankruptcy Update out this month. Whats more there are a few furniture and bedding retailers making the bankruptcy list.

The good news: Only one furniture-industry connected retailer was listed on a separate store closings table (not necessarily tied to bankruptcies) for closing 25 or more stores in the first half.

Also, BDO said it expects the pace of bankruptcies to slow down in this second half (more good news), but not the rate of closings (bad news).

The international accounting and business consulting firm said that bankruptcy pace accelerated since late 2018, noting last years holiday sales failed to meet expectations, with December retail sales dropping 1.6% from the month prior the weakest sales performance since December 2009.

That lackluster performance contributed to 10 bankruptcy filings in the first quarter of this year alone, BDO said, including the petitions filed by Payless ShoeSource, Gymboree and Charlotte Russe. A table in the report lists 14 retailers that filed for protection in the first half. Home furnishings industry names included Innovative Mattress Solutions, which filed in January, Z Gallerie filing in March and Hollander Sleep Products in May. The industry filings culminated in asset sales for IMS and Z Gallerie and reorganization and a debt-for-equity swap at Hollander, a maker of pillows, comforters, foam toppers and other sleep products.

BDO listed 19 retailers that have announced closings of 25 or more stores in the first half (led by Payless 2,354 closures) for a total of 7,282 stores. Rent-A-Center (125 stores closures announce) was the only furniture-centric company on that list. Apparel and footwear retailers accounted for more than 60% of all the closings and planned closings.

In an outlook section, BDO said, Despite the large number of bankruptcy filings and store closures, overall retail sales remained solid through the first half of 2019 and continue to show positive signs, thanks to a strong economy, record low unemployment and rising wages. These positives lead the firm to believe the risk of a significant downturn for the rest of this year is slim, although it added that retailers should remain cautious.

Some of the headwinds or current conditions that could put pressure on retailers and consumers going forward, include ongoing tariffs and expected increases on Chinese import tariffs and consumer debt, which reached record levels (more than $4 trillion) including rising mortgage, credit card and student loan debt.

Looking ahead through the end of 2019, we expect to see additional bankruptcy filings but at a slower pace than the first half of the year and for the heightened rate of store closures to continue, BDO said.

For two more takes on recent store closings and opposing views on what it all means, see this story.

Please feel free to email or call me with all of your retail news and tips, including expansion news, successful merchandising and marketing strategies and anything else you would like to see covered by Furniture/Today. Contact me directly at cengel@furnituretoday.com or 336-605-1129.

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BDO: Retail bankruptcies and store closings climb in first half - Furniture Today