Number of distressed U.S. retailers at highest level since Great Recession

[Yo_Mama_Been_Loggin]

The number of U.S. retailers ranked at the most-distressed level of the credit-rating spectrum has more than tripled since the Great Recession of 2008-2009 and is heading toward record levels in the next five years, Moody’s Investors Service said Monday.

The rating agency is the latest to weigh in on the state of the sector, and has 19 names in its retail and apparel portfolio, 14% of which are now trading at Caa/Ca. That’s deep into speculative, or “junk,” territory. It’s also a percentage close to the 16% considered distressed during the 2008/2009 period, said a Moody’s report led by retail analyst Charles O’Shea. The rise is part of a wider trend affecting sectors across Moody’s coverage that has retail replacing oil and gas as the most-troubled industry.

Retailers are in the midst of a secular shift to online sales led by juggernaut Amazon.com Inc. (AMZN) and that’s forcing many of them to spend heavily on their e-commerce operations. At the same time, mall traffic has slowed dramatically as consumer behavior changes, forcing many to discount heavily, hurting profit margins.

The 19 issuers on Moody’s list have more than $3.7 billion of debt maturing in the next five years, with about 30% of that total coming due by the end of 2018. The number is even higher when private credit is included.

https://www.msn.com/en-us/money/companies/number-of-distressed-us-retailers-at-highest-level-since-great-recession/ar-AAnxqZ1?li=BBnbfcN&ocid=edgsp

[bettyellen]

1. Rents are just insane, smaller shops cannot survive any more.

[LisaM]

2. I think that's right. All the tax breaks are given to developers......

none to the little guy. In many cities, including Seattle where I live, there are all kinds of empty storefronts that sit there till suddenly a chain will open multiple stores at once.

I'm not sure why city councils won't implement vacancy taxes for landlords that refuse to rent at an affordable rate. What are the developers going to do, not build there? Worse, almost every new project includes mixed retail and luxury housing, all the buildings look alike, and the businesses that go in are all the same.

[bettyellen]

3. Same in my town.....

[democratisphere]

4. Brick and mortar are in BIG trouble.

[logosoco]

5. "has slowed dramatically as consumer behavior changes,"

in my neck of the woods we call that smaller paychecks along with higher energy, insurance and food costs. Not exactly a change in behavior.

[EllieBC]

6. I buy a lot online.

1) I'm not thin. And most brick and mortar stores stock maybe 1-2 piece in the higher size limits while tons in the smaller sizes. And plus size clothing in most brick and mortar stores is awful and cheap looking.

2) I wear skirts, below the knee, always. Not always an easy find in a regular store.

3) The kids clothing for anything over 4T seems to be mini versions of the juniors department. My 7 year old doesn't need short shorts and tight tops, thanks.

4) I can shop when I please which is when the kids are asleep and I don't have to shlep them to a mall. If you've had the pleasure of dragging 3 kids through a mall you'll understand.

[LisaM]

10. I think that it is an issue.

I am pretty normal sized but Seattle stores all carry tiny sizes. I firmly believe in keeping money local but stores don't always make it easy and inventory is at such a minimum these days.

[MountCleaners]

11. I still shop in stores, but...

I don't shop in them when I am looking for something specific. A lot of times I'll find that the store offers something online that is not available in their store.

I don't buy clothes on Amazon, though - I've been disappointed before.

There are smaller businesses online that offer cool stuff at decent prices.

[padfun]

7. I buy a lot online too.

Although the stores are losing business, someone else is getting my business, maybe some home based entrepreneur. When it comes to the impact on the economy, it is a wash. I spend just as much either way. It's just a matter of who gets my business.

If those B&M places want my business, then they need to stock the varieties that I am looking for and for many, they don't have the space to stock so many varieties.

Business is changing, again.

[Doremus]

8. Most popular occupation is retail salesperson. Goodbye economy. nt

[Blue_true]

9. The Net has changed shopping forever.

Retailers will soon all be online and have just their signature stores open in major cities, literally a handful stores. Some retailers will vanish forever, IMO.

[MountCleaners]

13. The thing is...

Obviously the age of the great shopping mall has passed us. But I live near a formerly large shopping mall, and several giants have left, leaving these big empty boxes behind. The mayor tried to find something to take the place of the Sears, but the ideas were laughable. It makes the community seem blighted. I wish there were better plans for using all of that space once businesses have vacated. It's not fair to the people like me who WANT to stay in those communities.

[nolabels]

12. Whatever and however but just remember a few more pieces out this house of cards......

And the thing will fall flat on the floor. We have a very weak economic model and DT messing up the travel industry and alienating many trading partner countries is already bad and set us up for at least a recession. It will also mean only one or two wobbly legs will need to let go before the thing starts to go south like in the earlier Dot.com crash and the later one in 2008.

Our country doesn't make crap anymore, a republican model of stripping the natural resources for sale will meet with lots of resistance and starting another war for kickstart with its implications is just much more disaster. Gridlock and waiting it out economcally is probably what most cogent people will do. But of course we don't have cogent people pulling the levers anymore, so I would say all bets are off.

[jimjc]

14. costs soar

The days of big retailers are disappearing fast, that's obvious. The high cost of brick and mortar stores is a problem that won't be fixed. Nothing is going to change, all this will accelerate. Many retail jobs and the bloated corporate management jobs will disappear. Internet has changed everything.

Regarding consumers, much of what you purchase needs to be held and looked at before you buy? Many of these companies are starting to not pay for free shipping back unless something is wrong with the product and some companies don't pay if there is something wrong . Plus some companies make the process you go through to accomplish all this difficult. Shipping is getting expensive far more than actual costs. Whatever savings the consumer saves with the Internet purchase he looses with more expensive shipping, including the phony added cost of handling.

Internet purchases may not be the panacea many have thought them to be. I believe in the long run everything we purchase will be more expensive.