• Just Style

Ranks of distressed US retailers continue to grow


The number of "distressed retailers" in the US – those whose troubled finances mean they are in danger of filing for bankruptcy – is set to keep growing over the next 12 to 18 months, according to a new report.

The latest research by credit ratings agency Moody's Investors Service shows 22 retailers have ratings of Caa or lower – up from 19 in February when a similar survey was carried out.

The current number represents around 15% of the firm's retail and apparel universe. Debt rated at Caa, or below, is the lowest ranked on Moody's credit rating spectrum.

"The majority of retailers remain fundamentally healthy," says Moody's lead retail analyst Charlie O'Shea. "But as select groups of retailers continue to deteriorate – in particular department stores and specialty retailers – we believe the distressed ranks will keep growing, fuelled in part by distinct vulnerabilities within the B2/B3 retail population."

Apparel and footwear retailers currently rated Caa or lower by Moody's are Boardriders (subsidiary of Quiksilver), The Bon-Ton Stores, TOMS Shoes, David's Bridal, Vince LLC, Calceus Acquisition (owner of Cole Haan), Charlotte Russe, Neiman Marcus Group, Sears Holdings, Indra Holdings (owner of Totes Isotoner), Chinos Intermediate Holdings (parent of J Crew), Everest Holdings (manager of Eddie Bauer), Nine West Holdings, True Religion Apparel and Gymboree.

Those included on the list rank low in multiple categories covering their financial liquidity, ability to manage maturing debt by refinancing, credit profiles, competition challenges, ownership, and management structure.

In February, Moody's calculated that the number of distressed US retailers had tripled since the recession in 2008-09. Its list at the time included J Crew, Rue21 and Payless ShoeSource who were "hamstrung with weak credit metrics after taking on high levels of debt to fund acquisitions."

US fashion retailer J Crew has since cut 250 jobs as part of a strategic review, teen fashion retailer Rue21 filed for voluntary Chapter 11 bankruptcy protection after shuttering more than one-third of its US stores, and footwear giant Payless ShoeSource also filed for Chapter 11 Bankruptcy Protection with the closure of around 400 stores.

Moody's also warned that a larger pool of low-rated retailers also poses challenges for their stronger competitors.

"As they struggle to survive, distressed retailers can take more desperate measures, including highly promotional pricing that can border on irrational," O'Shea added. "This leaves stronger firms with the choice of either competing in a race to the bottom, or giving up sales in order to preserve margin."

And as companies under stress continue their downward spiral, liquidation and going-out-of-business sales inevitably follow, putting even more pricing pressure on their healthier competitors.


조회 2회

SSTS-SMPT 

Shinsung Bldg, 84, Pungseong-ro, 63-Gil, Gangdong-gu, Seoul, Korea T : +82-2-3709-9375 M : +82-10-7276-2527  E-mail : jinikong@ssts.co.kr​​