December 18, 2017
The retail sector has faced its share of challenges in 2017, a fact borne out by the more than 30 U.S. retailers that filed for bankruptcy protection in the first 11 months of the year. According to Trepp data, more than $35 billion of CMBS debt is exposed to retailers that sought bankruptcy protection this year.
The continued growth of ecommerce is largely viewed as the culprit for what has been referred to as the brick-and-mortar “retail apocalypse.” Yet, the volume of bankruptcies this year does not necessarily indicate a weak retail sector, but rather a shift to “survival of the fittest,” notes Retail TouchPoints. In fact, retail sector sales increased by 2.6% in 2016, and 5.6% in the first half of 2017. Retailers simply aren’t adapting to the shift towards ecommerce and away from malls.
Based on Trepp’s CMBS data, the retailers with the largest amounts of outstanding CMBS debt to file for bankruptcy in 2017 include:
1. The Limited, $14.7 billion: Ohio-based apparel company closed all 250 of its U.S. stores, and sold off its ecommerce domain and brand name
2. Toys “R” Us, $5.6 billion: The big-box retailer filed for Chapter 11 bankruptcy protection in mid-September in order to focus on restructuring its $5 billion debt load ahead of the holiday shopping season.
3. Gymboree, $5.4 billion: filed for bankruptcy in mid-June, reporting about $1.4 billion in debt; will close up to 450 of its 1,281 stores
4. Payless ShoeSource, $3.9 billion: filed for Chapter 11 bankruptcy protection and immediately shuttered 378 US stores in April
5. RadioShack, $2.4 billion: filed for bankruptcy relief in March, which marks the firm’s second bankruptcy filing since February 2015
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