JCPenney, Sears, Nieman Marcus and JCrew could collapse from the coronavirus recession

"Retailers who wandered around aimlessly before the pandemic will be significantly less likely to interfere than they were before," said Mark Cohen, director of retail studies at Columbia Business School.

During the pandemic, stores have been shut down. Dealers have exceeded hundreds of thousands of employees and lose most of their sales. And customers have reduced most purchases other than groceries and groceries. Depending on the length of consumer demand, companies may be forced to lay off workers, permanently close stores or restructure.

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"Retail-based retail is already struggling with Internet consumption trends before the coronavirus, and will now be faced with accelerated demand shifts to the Internet," said Randal Konik, an analyst at Jefferies, in a note to customers last week.

Sears, JCPenney (JCP), Neiman Marcus and J.Crew were some of the most distressed companies before the outbreak, according to analysts. Many were forced to close stores in the face of falling sales, even when unemployment reached a 50-year low.
Now with a record number of Americans applying for unemployment benefits, unemployment is likely to increase for months, not years to come, further cutting Americans' appetite and opportunity to take action. Sears filed for bankruptcy in 2018 and its the future has been in doubt ever since.
J. Crew filed for bankruptcy Monday.

JCPenney, Neiman Marcus and J. Crew are charged with crushing the debt load. They are also exposed to declining market share, too many stores, limited online sales and focus on the sale of discretionary goods, analysts said.

JCPenney had $ 3.7 billion in debt at the end of 2019. Although JCPenney has enough liquidity to survive the next few months, there may be challenges in refinancing the debt in the future, says David Silverman, senior director of Fitch Ratings.

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"There is a good chance that they will survive, but this is no setup," said Craig Johnson, president of Customer Growth Partners. "This is going to be a tree pointer deep in the corner with time running out." JCPenney will need to drastically reduce its 850 stores, Johnson said.

JCPenney did not respond to requests for comment.

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Neiman Marcus is considering filing for $ 4.3 billion in debt relief, Bloomberg reported last month. Neiman Marcus is "utterly helpless in light of the fact that the luxury sector may not show up quickly when the pandemic crisis is over," says Cohen of Columbia Business School.

Neiman Marcus declined to comment.

J.Crew has $ 1.6 billion in debt. Before the outbreak, J.Crew had plans spinner by Madewell, the fast growing denim brand, to help pay down part of the debt. But the corona virus derailed J.Crew's plans to launch one IPO by Madewell.
The J.Crew Group, which operates the J.Crew and Madewell brands, became it the first national US dealer to file for bankruptcy protection since the coronavirus pandemic forced a wave of store closures.

On Monday, J. Crew said it has filed to begin Chapter 11 proceedings in federal bankruptcy court in the Eastern District of Virginia. The company also said it had reached an agreement with its lenders to convert about $ 1.65 billion of debt into equity.

"This process gives the company a chance to survive. However, that survival does not only depend on reduced debt; it requires a new invention of the J.Crew brand," said Neil Saunders, an analyst at GlobalData Retail.

The end of Sears?

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Last month, Sears announced that they would close all remaining Sears-branded stores through April 30 at least because of the coronavirus outbreak. It keeps Kmart stores open where allowed. Many of these stores sell groceries and have pharmacies. It also included most of the employees at the company's headquarters.

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But the company has closed stores – continuously and permanently – for many years. $ 12 billion in losses since the last profitable year in 2010 made bankruptcy inevitable.

Sears and Kmart continue to shrink. Here's what was left

The store closures continued after Sears went out of business, suggesting losses in the now privately owned company continued. At the end of February, there were 182 stores down.

A company spokesman declined to comment for this story.

A second and last bankruptcy filing would not be unique to Sears. The retail cemetery is filled with companies that came out of bankruptcy with plans to continue operating, but soon went out of business. Among them are Payless shoes, Gymboree, American Apparel and RadioShack.

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