Market Mad House

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

The Death Spiral

Which Retailers will Coronavirus Kill?

Coronavirus will kill many retailers, including some iconic brands. Retailers are falling fast because the retail apocalypse was devastating the sector before coronavirus.

The pandemic is devastating retail because government has closed nonessential stores in many areas. In fact, Business Insider estimates over 90 major US retail brands had closed stores on 23 March 2020.  Thus many of those retailers are not making any money.

For example, sales at clothing stores fell by 78.8% and sales at electronics and appliance stores fell by 60.6% April 2020, Business Insider reports. Therefore, I conclude most clothing retailers will die.

Predictably JC Penney (NYSE: JCP), J. Crew Group, and Neiman Marcus have chapter filed for Chapter 11 bankruptcy, The New York Times reports. To elaborate, Chapter 11 bankruptcy prevents creditors from taking legal action against companies.

What Retailers will Coronavirus Kill?

Many famous retail brands will disappear completely because of coronavirus. Some of the most prominent coronavirus casualties in American retail could include:

  • Sears. The sick man of American of retail has been dying for a long time. In fact, Sears was down to 182 operating stores by February 2020, Business Insider estimates. I predict no Sears will reopen after coronavirus. At its height in 2005, Sears operated over 3,500 stores.
  • Kmart this brand was once the definitive American big box discount store and the template for Walmart. Now part of Sears, Kmart was about to close before coronavirus. I suspect Kmart could be dead now.
  • JC Penney (NYSE: JCP) Mr. Market paid 22₵ a share for this bankrupt retailer’s stock on 18 May 2020. I will not be surprised if this historic company’s department stores will not reopen.
  • Dillard’s Inc. (NYSE: DDS) I cannot see how this chain’s 285 department stores can survive coronavirus. Mr. Market disagrees because he paid $25.48 for Dillard’s shares on 18 May 2020. I think Dillard’s will die because it had only $277.08 million in cash and short-term investments and a quarterly operating income of $67.69 million on 31 January 2020.
  • Kohl’s Corporation (NYSE: KSS) Falling middle-class incomes drove 21st Century growth at this bargain department. However, Amazon (NASDAQ: AMZN) has been cutting into Kohl’s business in recent years. Before, coronavirus a desperate Kohl’s had been trying through partnerships with Amazon, Aldi, and other retailers. Mr. Market still has faith in Kohl’s he paid $19.08 for its stock on 18 May 2020.
  • The Gap (NYSE: GPS) This once iconic clothing retailer has been struggling for a long time. I think the Gap’s mall stores could die. However, some Gap subsidiaries; including Banana Republic and Old Navy, could survive in some fashion. For example, the Gap, Banana Republic, and Old Navy could survive as clothing brands sold through Amazon or However, I think the Gap’s stores could all die. Mr. Market has little faith in the Gap, he was paying $8.19 for shares of this dying icon on 18 May 2020.
  • Macy’s (NYSE: M) I think this department store icon is closer to death than many people suspect. Incredibly, Mr. Market valued Macy’s at $5.36 a share on 18 May 2020. Thus, Macy’s share price is less than the Gap. I think all Macy’s stores could close this year.
  • Bloomingdale’s I think this iconic department store brand could die with its parent company, Macy’s.
  • Neiman Marcus This privately held department store icon has filed for chapter 11 bankruptcy. I think it will take a miracle to save Neiman Marcus from oblivion.
  • Aéropostale I predict this mall staple will follow its competitor the Gap straight into oblivion. Interestingly, Aéropostale could survive as a clothing brand as its stores close.
  • Abercrombie & Fitch (NYSE: ANF) I predict this casual retailer’s stores will close. However, Abercrombie & Fitch could survive as a clothing brand sold through Amazon. Mr. Market paid $12.24 for Abercrombie & Fitch Co. (NYSE: ANF)  shares on 18 May 2020.

What Will Happen to the Dying Retailers?

I predict many of these dying retailers will not disappear. Instead, they will survive as brands owned by someone else, possibly Amazon.

Amazon could buy Abercrombie & Fitch, Aéropostale, and the Gap to get their clothing brands. In addition, Amazon could buy Neiman Marcus, Macy’s, or Kohl’s.

To elaborate Amazon could convert Macy’s or Kohl’s stores into fulfillment centers to support delivery local, regional, or same-day delivery operations. In addition, Amazon could use Macy’s or Kohl’s as pickup and return locations for online orders.

Notably, Jeff Bezos could portray himself as the savior of retail by buying a dying Macy’s or Kohl’s. Remember Amazon bought the dying grocer Whole Foods to leverage its reputation. Amazon could do the same with the Gap or Neiman Marcus’s reputation for luxury.

Beyond Amazon, hedge funds, private equity firms, Walmart (NYSE: WMT), and Berkshire Hathaway (NYSE: BRK.B) could buy dying retailers. Berkshire has bought dying clothing brands before.

Notably, Berkshire Hathaway bought the bankrupt underwear brand Fruit of the Loom in 2001 for $835 million. Thus, I think Berkshire could buy Abercrombie & Fitch to sell its brands through Amazon.

Coronavirus will change Retail behind Recognition

In the final analysis, coronavirus will disrupt retail beyond recognition. Expect to see many historic retail brands die while big box retailers such as Costco (NASDAQ: COST) and Amazon prosper.