A raft of distressed apparel and home retailers landed on a new list of companies at risk of failure.
Women’s chain Christopher & Banks, men’s big and tall apparel chain DXL and women’s specialty chain Francesca’s, which continues to hint at a potential bankruptcy filing, all appear on S&P Global Market Intelligence’s just-released September list outlining the sector’s vulnerable players.
In the home subset, e-commerce giant Wayfair and home decor player Kirkland’s also earned spots on the S&P list, which named event specialist Party City as an at-risk nameplate, too.
The credit ratings firm analyzed each company’s one-year probability of default scores, which ranged from 38.1 percent to 12.2 percent. Implied credit scores were between “ccc-” at the low end to a slightly higher “ccc+.” S&P and fellow credit rating firms Fitch use the scores to denote long-term bonds and other investment instruments that are considered high risk. The investment community describes bonds with the CCC- rating as junk bonds.
Christopher & Banks carries a one-year probability of default score of 23.1 percent, while Destination XL was slightly lower at 18 percent. Francesca’s was at the bottom of the 15-company list at 12.2 percent.
Wayfair’s default score was 18.6 percent, while Kirkland was 12.8 percent, ranking at No. 14, just above Francesca’s.
The September Market Intelligence report also noted that the bankruptcy count for U.S. retailers through early September, including the Century 21 filing last week, brings the total to 46 for the year so far, exceeding the total retail bankruptcies in any year since 2010. Beyond apparel and home retailers, companies including Interstate Commodities, online retailer Occasion Brands, restaurant supply distributor BHS Foodservice Solutions, and health and wellness chain GNC.
But apparel makes up the bulk of the list. Modell’s Sporting Goods, Century 21 Department Stores, Stage Stores Inc. and Stein Mart Inc. are slated for the retail graveyard, while Le Tote Inc.’s Lord & Taylor business is also headed in that direction. J. Hilburn Inc. and Chinos Holdings, the former parent of J. Crew Group, have been fortunate to exit Chapter 11 proceedings. Neiman Marcus Group is about to wrap up its case, too, while J. C. Penney has a deal in place for an exit, but it still needs final bankruptcy court approval and could see a new bidder pop up at auction. Brooks Brothers and Lucky Brand have been sold, while the future of Ascena Retail Group, Tailored Brands and Centric Brands remains up in the air.