Five fashion and one home retailer made S&P’s Market Intelligence’s December watchlist of retailers at risk.
The fashion companies span Christopher & Banks, which just warned it might go bankrupt, in addition to J. Jill, DXL, Express and Vince. The lone home retailer is decorating specialist Wayfair.
Women’s budget fashion chain Francesca’s was removed from the September watch list because it filed for Chapter 11 bankruptcy on Dec. 3, with plans to attract a buyer.
S&P bases the vulnerability list on an analysis of default scores across retail categories ranging from household and personal products to consumer durables and apparel. Using a one-year probability-of-default score, Christopher & Banks ranks the highest among the six fashion and home retailers with a score of 24.5 percent. The company on Monday said in a quarterly filing with the Securities and Exchange Commission that it might have to file for bankruptcy court protection because it’s running out of cash to meet financial obligations And if it can’t obtain a waiver from lenders or amend the terms of its credit facility, Christopher & Banks would be in default.
Just behind Christopher & Banks was J. Jill, with a score of 22.5. Known for its soft-structured knits and layering options, the women’s specialty chain at the end of September finally completed an out-of-court financial restructuring after five forbearance extensions. That restructuring saw $15 million in new capital and the maturity of certain of its term loan debt extended to May 2024. But in its third quarter report after the financial restructuring, the company said net sales fell 29.4 percent to $117.2 million. Net losses totaled $23.2 million for the quarter, versus net income of $2.4 million a year ago.
Meanwhile, DXL, the men’s big and tall apparel chain, garnered a default probability score of 19.1. On Friday, the men’s retailer said it “continues to believe a path for recovery for fiscal year 2021 is in view given its actions and performance to ate from the Covid-19 pandemic.” CEO Harvey Kanter said the company has taken steps to manage inventory, restructure occupancy costs and reduce its selling, general and administrative costs. But he also said, “Year-to-date through November, our DXL.com sales were up 41 percent over fiscal 2019 levels, and we expect the growth trend in this channel to continue in fiscal 2021. We also expect our stores to continue their trend of being down compared to fiscal 2019 levels.”
Express, Wayfair and Vince earned probability-of-default scores in the teens.