Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Death Spiral

Companies that Might Disappear in 2017

The last fear years have been pretty rough on companies. Several iconic retailers ranging from A&P to Radio Shack have bit the dust. Even some other corporate entities including the Ringling Brothers, Barnum & Bailey Circus, which has been touring since 1871 are shutting down.

With the great retail die off heating off, many investors are wondering what companies will disappear next. Here is a list of companies in several industries that might vanish over the next year or so.

Companies that might die in 2017

Some companies likely to become extinct in 2017 include:

  1. Sears Holdings (NASDAQ: SHLD) – the losses at this iconic retailer have become incredible. It reported a “net income’ of -$2.194 billion, and losing -$1.521 billion in cash from operations during third quarter 2016. Not surprisingly, Sears has been closing stores right and left. The latest list contains 150 Sears and Kmart stores that will shut down in early 2017, Business Insider reported.

  1. Kmart – This discount pioneer; now part of Sears. is closing even faster than its parent. By my count 108 Kmart locations are on the latest death list. I would not be at all surprised if Kmart was completely gone by summer.


  1. Sears Hometown and Outlet (NASDAQ: SHOS) – This turkey; which operates Sears franchises, is in even worse shape than the company that spun it off. It reported a negative net income of -$108.73 million, a diluted earnings per share figure -4.79 and a “profit margin” of -19.11%. That led to a cash from operations figure of -$64.81 million. Both this company and its stock are definitely circling the bowl. Investors were rewarded with a stock price of $4.10 a share on January 18, 2017. They also received a negative return on equity of -27.89% for third quarter 2016.


  1. Twitter (NYSE: TWTR) – Despite its popularity with our new president, Twitter is the sick man of social media; with a profit margin of -16.7% and a net income of -$380.6 million at the end of third quarter 2016. Those numbers explain why the management team is desperate bid to sell the company. The problem is buyers are hard to find because of Twitter’s sleazy reputation, and inability to make money.


  1. Supervalu (NYSE: SVLU) – Rumors indicate that this supermarket operator; which owns Save-a-Lot and Cub Foods among other brands, is trying to sell itself to Kroger (NYSE: KR) and it is easy to see why. Supervalu reported making a net income of just $163 million on $17.21 billion in revenue for third quarter 2016. Supervalu achieved a share price of $4.375 on January 18, 2017.


  1. Groupon (NASDAQ: GRPN) – This formerly hot mobile coupon service is rapidly going down the drain. At the end of third quarter 2016, Groupon achieved a negative net income of -$188.53 million, a diluted earnings per share figure of -.32, “profit margin” of -5.27% and a free cash flow of -$53.82 million. Investors were rewarded with a share price of $3.51 and a return on equity of -43.77%.


  1. JC Penney (NYSE: JCP) – This department store operator has managed to survive and make some money. Yet it certainly has some problems such as a “profit margin” of -2.35%, a net income of -$322 million, and an earnings per share figure of -1.05. There was also a free cash flow of -$315 million. With cash and short term investments of $183 million and $455 million in cash from operations at the end of third quarter, this company is dangerously close to the death spiral. All it would take to sink J.C. Penney at this point is a few seasons of bad sales.


  1. Rite Aid (NYSE: RAD) – Current speculation is that Walgreens Boots Alliance’s (NASDAQ: WBA)’s acquisition of this drugstore operator will be approved. If that happens it might vanish in many markets; including Denver, where Walgreens has a much large footprint. There’s also some speculation the Federal Trade Commission (FTC) might crush the merger. If that happens Rite Aid might simply collapse, because of its low operating margin. Rite Aid reported a free cash flow of just $24.58 million and a “profit margin” of .19% for third quarter 2016.


  1. Men’s Wearhouse (NYSE: MW) The Wall Street Beacon predicted that this clothing store will post no earnings for first quarter 2017. That means earnings will not available or N/A. That might mean the death spiral and closure are imminent.


  1. Pandora (NYSE: P) – Despite its popularity, the digital radio service’s losses have been piling up. The company reported a negative profit margin of -17.49%, a net income of -$272.38 million and a free cash flow of -$140.36 million for third quarter 2016. With numbers like that, it is no wonder that Reuters reported that Sirius XM Chairman Greg Maffei has made yet another takeover offer for Pandora, Reuters reported. Expect Pandora’s service to survive, like Twitter, but the company to disappear.


Despite a high level of optimism and a booming stock market, 2017 is shaping up to be a rough year for American business. Expect to see many iconic brands and ticker symbols vanish in the years to come.