Market Mad House

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

Grocery Wars

The Ever Growing List of Doomed Retailers

The Great Retail Apocalypse of 2017 is growing worse every day and claiming more casualties every time we look. Recent media reports indicate that the body count at the shopping centers is getting higher every day.

The number of doomed retailers is so great that we now need a scorecard to keep count. To that end here is a scorecard of doomed and potentially doomed retailers.

The Ever Growing List of Doomed Retailers

Here is a list of retailers to visit soon because they will be gone in the near future.

  1. Toys R Us – This strip mall icon filed for Chapter 11 Bankruptcy-Protection on September 18, 2017. No store closings are planned, but they are likely because of the fortune the company owes to creditors and vendors. Toys R Us owes $7.5 billion to 100,000 creditors, The Washington Post reported. It owes $136 million to Mattel alone. A likely scenario is that subsidiary Babies R Us will get shuttered first. Expect collapse here after the Christmas shopping season.

  1. JC Penney Co (NYSE: JCP) – This department store dinosaur is on the fast track to extinction. Mr. Market gave it a stock price of $3.55 on 4 October 2017. That led to a market capitalization of $1.105 billion and an enterprise value of $5.095billion on the same day. It is easy to see why Penney’s has not made any income in nearly five years. Ycharts reported that it has been operating at a loss since at least October 2012. Penney’s reported a “net income” of -$117 million on 31 July 2017. Expect this company to be gone next year.


  1. Dillard’s (NYSE: DDS) – This department store brand has lost over half of its income in less than two years. Back in July 2015, Dillard’s reported $325.24 million in income, by July 2017 that number had fallen to $128.93 million. Losses and a collapse in stock value are likely just around the corner at Dillard’s. Revenues have been falling for two years straight from $6.843 billion in July 2015 to $6.307 billion in July 2017. The people who paid $53.31 a share for this company’s stock on 4 October 2017 need their heads examined.


  1. Rite Aid (NYSE: RAD) – This company is officially gone despite $32.09 billion in revenue reported on August 21, 2017. It reported a net income of just $89.24 million on that revenue on the same day. Investors reaped the rewards of that performance with a stock price of $2.08 on 4 October 4, 2017. Retail vultures like Walgreens (NASDAQ: WBA) plan to strip the carcass of Rite Aid. Walgreens will take 1,932 stores of Rite Aid’s stores. News reports did not say what will happen to the rest of Rite Aid’s 2,600 locations. A likely scenario is that smaller drugstore operators like Fred’s (NYSE: FRED); or dollar store operators like Dollar Tree (NASDAQ: DLTR) will try to grab them.


  1. The Bon-Ton Stores (NASDAQ: BONT) – This retail zombie has hit rock bottom – its shares were trading at 41.85¢ on 4 October 2017. That gave it a market capitalization of $9.007 million on the same day. The smartest move here would be to shut down the stores and sell off the company’s assets which are supposedly worth $1.387 billion. Stupidly enough BonTon (which owns the Boston Store, Younkers, Bergner’s, Carson’s, Elder-Beerman, and Herberger’s brands) is not doing that, instead it’s planning to hire 10,000 holiday season workers, The Milwaukee Journal Sentinel reported. What is it planning to pay them with? Cash and short-term investments were $6.335 million on 31, 2017, and the free cash flow was $30.94 million on the same day. Bon Ton also reported a loss of -$77.39 million instead of a net income. This company is dead the only thing keeping Bon Ton afloat is the money it is borrowing, it pulled in $21.09 in cash from financing on July 31, 2017’ in other words Bon Ton is borrowing money to pay its bills.


  1. Supervalu (NYSE: SVU) – The parent of Cub Foods has been at death’s door for some time. Although doom might be approaching because its stock value is collapsing. Shares which were trading at $34.92 on September 30, 2016, fell to $21.63 on October 4, 2017. Supervalu’s current struggles include a free cash flow of -$92 million, and $230 million in cash from operations despite $13.78 billion in revenues reported on May 31, 2017. That gave the company an income of $615 million on May 31, 2017. The most likely outcome for Supervalu is acquisition probably by Kroger (NYSE: KR) because it would be cheap right now. Supervalu had a market capitalization of $829.67 million and an enterprise value of $1.909 billion on October 4, 2017. Kroger (NYSE: KR) is likely to pounce on a big grocer that cheap if it does not Amazon or Safeway will.

Mass Die-Off of Retailers coming for Holiday Season 2017

This list is only partial because the malls are full of dying retailers. Almost all the mall-based clothing retailers are likely to close in the next two years. Also facing potential doom are most of the category killers.

Expect to see a mass die-off of sick retailers in January and February of 2018 as the dust from the 2017 holiday season settles. If it is anything like last year’s numerous retailers are likely to report losses and more than a few will shut down.

Two brands likely to declare bankruptcy or get liquidated early next year are JC Penney and Bon Ton. Other probable casualties include Sears Holdings (NASDAQ: SHLD) and its sicker subsidiary Kmart.

The list of doomed retailers is likely to grow next year, along with the empty store fronts and for rent signs at the mall. Expect a dismal holiday season at the nation’s malls and shopping centers this year and a very good one at Jeff Bezos’ house.