American Enterprises Have Applied For Bankruptcy Protection One After Another, And The "Closing Tide" Is Coming?

Beijing, May 9 (reporter Zhang Ni) recently, J. crew, a famous American clothing brand, and Niman Marcus, a luxury retailer, applied for bankruptcy protection one after another, arousing public concern.

U.S. retail sales fell 8.7% month on month in March, with clothing retail sales down more than 50%, according to official data released by the United States. Skykey, Crocs, gap and other well-known brands have recently exposed a dismal performance.

Today, the spread of the epidemic situation in the United States remains the same. Will the large-scale "closing tide" really come?

J. crew was favored by first lady before bankruptcy

J. crew has been one of the mainstream brands in American fashion industry in recent decades. In 1989, the brand opened its first store in Manhattan and expanded to other parts of the United States and overseas.

J. Lauren's design is considered to be "approachable to the outside world". And the brand was once famous for being favored by celebrities such as former first lady Michelle Obama and British Princess Kate, and its products were once out of stock.

But in recent years, the company has been burdened with heavy debt and suffered from sales decline, and a new crown pneumonia epidemic has made the situation worse.

J. crew closed 500 stores in March, laid off tens of thousands of employees and decided not to pay the rent in April due to a massive loss of revenue, according to a report by Bloomberg business week.

On May 4, local time, J. crew filed for bankruptcy protection. It has also become the first national retailer to apply for bankruptcy protection since the outbreak of the epidemic in the United States. According to the bankruptcy filing, J. crew estimated that the loss caused by the closure of the affected stores would be about $900 million.

However, the move does not mean that J. crew will close its business.

After applying for bankruptcy protection, the company's debt of $1.65 billion will be converted into equity. It also plans to close some stores in exchange for the lender's capital of about 400 million US dollars. It will slowly transform and start again.

The same is true for Madewell, another brand within the group. Faced with the group's upcoming opening of the next chapter, the official also issued a statement earlier that the online sales business would operate as usual. Once the anti epidemic blockade measures were lifted, its retail stores would also resume business.

The retail industry as a whole has been hit hard, and many well-known brands have been unable to bear it

It's not just the J. crew family that's having a hard time.

Shortly after J. crew filed for bankruptcy protection, Niman Marcus, a 113 year old American luxury retailer, filed for bankruptcy protection.

In addition, the sales performance of some famous brands in the first quarter was also quite bad.

Prior to this, American sports brand Skye officially released the first quarter of 2020: sales in the first quarter were 1.24 billion US dollars, a year-on-year decrease of 2.7%. The net profit was 49.1 million US dollars, which was 108.8 million US dollars in the same period of last year, with a year-on-year decrease of 54.8%. Crocs' sales and earnings also declined in the first quarter of fiscal year 2020.

Gap, whose sales have been declining in recent years, can't bear it.

According to a gap filing with the SEC at the end of April, the company's accounts have evaporated $1 billion since February. In order to improve cash flow, gap decided to let about 80000 employees take leave, cut executive pay, and negotiated with the property not to pay the rent of the shop temporarily closed in April.

Retail sales in the U.S. fell the biggest on record in March as the epidemic forced thousands of stores in the country to close.

The clothing industry seems to have suffered even more in this epidemic. According to U.S. media reports, affected by the epidemic, the overall income of the U.S. clothing industry fell by about 52%.

According to the data released by the U.S. Department of Commerce on April 15, U.S. retail sales fell 8.7% month on month to $483.1 billion in March, the largest month on month decline since data records began in 1992.

Specifically, the sales of automobile dealers and gas stations in the United States decreased by 27.1% and 17.2% month on month, clothing retail sales decreased by 50.5%, department store sales decreased by 19.7%, and catering retail sales decreased by 26.5%.

However, due to more people working at home and buying a large number of cleaning products such as hand sanitizers, some retail categories rose on a month on month basis, with grocery sales up 26.9% and health and personal goods retail sales up 4.3%.

Will U.S. enterprises usher in a "closing tide" in 2020?

For many traditional retailers, the epidemic has brought a devastating blow.

As wages cannot be guaranteed, consumer confidence is frustrated, and consumption enthusiasm is greatly suppressed. Many stores in the U.S. have been closed, resulting in a decrease in sales in many states.

Analysts believe U.S. retail sales may be worse in April than in March. Retail sales in the United States are expected to rebound after the outbreak, but it is difficult to return to the level before the outbreak in the short term.

On the other hand, the epidemic is still raging in all States of the United States.

According to Johns Hopkins University, there are more than 1.25 million cases and more than 75000 deaths in the United States.

Although the spread of the epidemic situation is still grim, but in the increasingly frequent "restart" sound, the U.S. states have adopted a different pace of economic recovery.

At the same time, enterprises are struggling to "save themselves".

Gap group plans to reopen 800 stores in North America this month, including Old Navy, gap and banana republic, but fitting rooms and public toilets will be closed, according to US media reports.

Its CEO said in an interview with the media that the biggest challenge for stores to resume business is that different regions have different requirements for store resumption, so there is no way to formulate uniform regulations among stores. As a retailer, it is necessary to cooperate with the government.

At the same time, in the face of difficulties, gap is trying to expand its product line to cover more people and attract more consumption.

"In the United States, the" closing tide "in 2020 will only be worse than that in 2019." "Business week" recently wrote an analysis said.

The article emphasizes that during the post epidemic period, while ensuring safety, the retail industry should adjust its product line, strengthen innovation, diversify product mix, invest abroad, cut off redundant business, and streamline stores. It also needs to attach importance to data and attract passenger flow in innovative ways. (end)