Though it restructured amid the tumult of 2020 and narrowed its fourth quarter loss, J.Jill was fingered as one of S&P Global’s most vulnerable public chains, while Fitch Ratings said the retailer’s $235.5 million in outstanding debt earned a spot on its Top Loans of Concern list.
Men’s chain Destination XL Group Inc., women’s specialty apparel firm Vince Holding Corp. and women’s chain Chico’s FAS Inc. also made S&P’s March list.
Home goods off-price retailer Tuesday Morning Corp., a chain of 490 stores that filed for Chapter 11 last year, remains on S&P’s watch list despite exiting bankruptcy in January.
At Fitch, the leveraged finance group identified 10 companies distinguished by low credit ratings or that might have issues trading at a material discount to par. These companies, it added, also might have hired a restructuring advisor or issued a going-concern warning, much as Francesca’s did for months before its eventual bankruptcy petition.
Last year, Fitch said the retail TTM institutional term loan default rate finished in 2020 at 18.8 percent, with the default volume at $10.6 billion. The rate rose to 21.0 percent following Belk’s default.
In addition to J.Jill, the other fashion firms at risk of default, based on Fitch Rating’s Top Loans of Concern, include Boardriders Inc., Men’s Wearhouse Inc., Talbots Inc., Nine West Holdings Inc., Blue Nile Inc. and Iconix Brand Group Inc.
Surf-inspired apparel firm Boardriders, formerly known as Quiksilver, includes the core Quiksilver, Billabong, Roxy and DC Shoes brands and owes $450 million in outstanding debt, Fitch says.
Men’s Wearhouse Inc., since renamed Tailored Brands, has faced financial pressure since 2014, when its $1.8 billion Jos. A. Bank acquisition ballooned its debt to more than $2 billion. The company’s been struggling for years as casualization in the workplace dampened demand for men’s suits and more formal attire. After filing a Chapter 11 petition in August, Tailored exited bankruptcy in December and later closed on $75 million in new financing that Fitch says brings its debt load to $365 million.
Sycamore Partners-owned Talbots owes $360 million, an amount that earned the women’s specialty chain a place on more than one watch list. In January, S&P downgraded the retailer to a junk “CCC-“ rating that indicates its high likelihood of default. Meanwhile, Moody’s Investors Service questions how Talbots will weather the ongoing work-from-home movement that reduces demand for its professional, dressier fare, coupled with the sluggish recovery in formal apparel spending among its core 45-to-65-year-old shoppers. Both the retailer’s term loan and asset-based revolving credit facility expire in the back half of 2022, it noted.
Nine West emerged from bankruptcy in March 2019 under majority ownership of CVC Credit Partners and Brigade Capital. Formerly known as Jones New York and The Jones Group until it was acquired by private equity firm Sycamore and spun out as a standalone firm, it now has been renamed Premier Brands Group Holdings. Despite the restructuring, Fitch has concerns about its $325 million in debt.
Blue Nile Inc., the jewelry firm known for diamond engagement rings, owes $168.9 million while brand management firm Iconix Brand Group has a debt load listed at $155.6 million.
Another firm that made the Fitch list is Serta Simmons Bedding LLC, which garnered the top spot with $2.07 billion of outstanding debt.