American Brands That Might Not Survive the Coronavirus

Luxury department store chain Neiman Marcus filed for Chapter 11 bankruptcy protection on May 7 in an attempt to restructure debt and survive the harsh economic conditions created by the coronavirus pandemic. The company had been saddled with $4 billion in debt since its 2013 sale to a private equity firm.

Issues had been compounded by the recent precipitous drop in sales of luxury goods, which were likely some of the first purchases to be postponed during the pandemic. At the time of filing, all of the retailer’s locations had been closed and most of its 14,000 employees had been furloughed.

With virtually all live events canceled for the foreseeable future, ticket exchange and sale company StubHub is facing an unprecedented situation. StubHub updated its refund policy as more than 20,000 events were nixed. Company President Sukhinder Singh Cassidy told Axios that the company was unable to “take the risk of giving refunds to buyers before recouping the same refund from the seller.” This elicited lawsuits from fans who say they never got refunds despite the NBA, NHL, and MLB postponing their seasons and despite the company’s own refund policy.

StubHub furloughed most of its staff — around 300 people. The crisis also came at a time that StubHub’s $4 billion buyout from Viagogo was halted by U.K. courts in February. The National Association of Ticket Brokers say they may have to seek a government bailout to keep the industry afloat. The National Association of Ticket Brokers represents dozens of U.S. ticketing companies, although StubHub is not a member of the organization and has not requested any government assistance.

J.C. Penney’s multi-billion dollar debt load, combined with the chain closing most of its stores nationwide because of COVID-19, has cast the company’s future into doubt. J.C. Penney is reportedly mulling a bankruptcy filing and recently said it did not make a $12 million interest payment due in April.

AMC Theaters was reportedly considering entering bankruptcy in April, but then was looking at raising half a billion dollars through a private placement debt offering. This may have staved off the bankruptcy option at least for the time being.

Although some states are now allowing movie theaters to reopen at reduced capacity, AMC said it is not anticipating a reopening until late June at the earliest. The company closed all theaters in mid-March and furloughed or laid off over 26,000 employees. With no ticket sales, AMC Theaters told its landlords it would stop paying rent in April.

Once an American icon, Sears has struggled for years. In the years since 2010, its last profitable year, the retailer reported losses of $12 billion. After filing for bankruptcy in 2018, Sears continued to shrink operations after restructuring its debt, closing another 100-plus stores since, and staying with just under 200 stores, a fraction of the over 3,000 locations it operated at the beginning of the 21st century.

The coronavirus may be a death sentence for Sears, as all locations have remained closed as of early May. While all large brick-and-mortar retailers are facing challenges with the pandemic and the rise of e-commerce, Sears’ shaky financial footing makes it uniquely vulnerable.

The new social distancing requirements, which might remain in place for some time, could spell the end for co-working spaces — particularly WeWork. The company’s occupancy dropped by nearly two-thirds in April. WeWork stopped paying its rent that month and is reportedly renegotiating its leases.

The company came into 2020 already in disarray. In September 2019, co-founder and former CEO Adam Neumann stepped down after reports of his chaotic management style surfaced and a planned IPO was scrapped. Neumann sued WeWork’s new owner, SoftBank, after it announced it would no longer purchase stock from Neumann and others.

Weeks after closing its doors on March 16, J. Crew filed for Chapter 11 bankruptcy. The company also said it reached an agreement with its lenders to convert more than $1.6 billion of the company’s debt into equity. J. Crew also secured a $400 million loan, though it may be increasingly difficult for the company to pay it back as its credit rating has been downgraded twice by credit rating agency Moody’s during the pandemic. The company was planning an IPO for its Madewell brand in early 2020 to help ease the debt burden, but those plans are on hold indefinitely.

Telecommunications company Frontier Communications entered the pandemic in a dire situation, with a debt burden of more than $17 billion. The telecom provider also carries a credit rating of SD (selective default), meaning credit rating agency Standard & Poor’s believes Frontier selectively defaulted on a financial obligation.

In an attempt to lessen its debt, Frontier declared bankruptcy in April and sold its operations and assets in four northwest U.S. states. Frontier’s stock has been in decline for years, and was worth less than 8 cents per share as of May 8.

Though some of Bed Bath & Beyond’s products, like soaps and toiletries, may have been in high demand since the pandemic hit the U.S., many other of the company’s products have likely not sold that well. The company struggled ahead of the pandemic as well. In the fourth quarter of fiscal 2019, which ended February 29, 2020, sales dropped more than 6%.

As of May 8, stores remained closed, and most Bed Bath & Beyond workers have been furloughed since early April. Bed Bath & Beyond stock, which ended 2019 worth more than $17 per share, fell to under $4 per share in April and was worth less than $6 per share as of early May.

With nonessential travel all but canceled, car rental company Hertz is struggling with a lack of income. The company was reportedly considering bankruptcy to restructure an estimated $17 billion in debt, according to the Wall Street Journal.

Hertz reached an agreement with its lenders that would give it until May 22 to “develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic,” the company said in a filing. Hertz announced a plan cut nearly 10,000 jobs in April, but the company still failed to make some lease payments that month.

Just before the coronavirus shut down much of the U.S. economy, Steak ‘n Shake was already closing restaurants. Facing declining sales, the burger chain temporarily closed over 100 locations in February to convert them into counter-service only restaurants to save on labor costs associated with having a waitstaff. The company reported an operating loss of $18.6 million in 2019.

Steak ‘n Shake is seen as a bankruptcy risk because of its restaurant closures and the resulting lost cash flow, as well as the struggles associated with operating during the COVID-19 crisis and the coming maturity of a $181.5 million loan in 2021.

Like many other retailers, department store chain Nordstrom has been in trouble since governments nationwide ordered the closure of nonessential businesses. The company shut down all of its physical stores and furloughed the majority of its workforce.

On April 8, Nordstrom issued a note to investors about the impacts the COVID-19 pandemic had on its operations. In the note, the company said, “The longer our stores remain closed to the public, the greater impact it will have on our results of operations and financial condition, and if our physical locations remain closed to customers for an extended period of time our financial situation could become distressed.” On May 6, the company announced it would be closing 16 locations permanently in nine states and Puerto Rico.

Even though food products have been in high demand during the pandemic, nutrition-related products seller GNC has not been able to capitalize — in part because it relies heavily on in-person sales instead of online sales. GNC furloughed “a significant portion” of its 12,400 employees, and the company’s credit rating was also recently downgraded by rating agency Fitch.

GNC’s stock, which was over $2 per share in mid-February, has fallen to below 60 cents as of early May, with the NYSE threatening to delist GNC as the stock has traded at under $1 per share for more than a month. GNC could also face a class action lawsuit after a law firm announced it was investigating the company’s board for “fraud and breach of fiduciary duty,” claiming board members would reap the benefits of any bankruptcy that results at the expense of shareholders.

Casual dining restaurant chain Ruby Tuesday had been struggling financially long before the COVID-19 pandemic forced the nation’s restaurants to temporarily close. The company’s nationwide presence has been declining for years — from 945 U.S. locations in 2007 to less than 500 today. As the nationwide lockdown continues, already a number of closed Ruby Tuesday locations have announced that they will not be reopening.

Bans on crowds of more than 10 people across the nation spelled disaster for large gym chains like Gold’s Gym. The gym company filed for bankruptcy in early May. CEO Adam Zeitsiff pledged that Gold’s Gym would reopen but it already had to permanently close 30 company-owned locations amid the pandemic.

Some Gold’s Gym locations have begun reopening, with enhanced safety measures in place. Still, it remains to be seen how willing consumers will be to share a confined space after turning to at-home alternatives like Peloton, which has skyrocketed in popularity since social distancing measures have been implemented.

The global oil industry has been devastated by a historic plummet in oil prices stemming from a lack of demand during the global shutdown and a price war between Russia and Saudi Arabia. In April, the price of West Texas Intermediate oil futures set for May fell below zero for the first time. A number of smaller oil operations are at risk of going under, and even larger energy companies are at risk.

Reuters reported on April 30 that Chesapeake Energy, a shale gas drilling company that was one of the biggest beneficiaries of the fracking boom in the United States, is preparing to file for bankruptcy.

Norwegian Cruise Line, headquartered in Miami, said in a May 5 filing there was “substantial doubt about the Company’s ability to continue” as a result of COVID-19. The cruise industry has taken a beating since the Grand Princess cruise ship became one of the earliest major outbreaks among Americans in late February.

Before that incident, Norwegian Cruise Line stock traded at more than $50 per share. As of May 8, the stock was trading below $13 per share. All U.S. cruises were hit with a no-sail order, and Norwegian suspended all voyages through the end of June.

Unlike many other businesses that offer food, Dave & Buster’s relies on customers coming inside and paying for arcade games. Games and other amusements account for almost 60% of the restaurant and entertainment company’s revenue. Even when locations begin to reopen, customers may be hesitant to come back and use games that others have touched.

Dave & Buster’s in April furloughed over 15,000 employees and did not pay rent. As of May 8, the company’s stock price was less than a quarter of its share price of $46 in mid-February. To help bolster its financials, the company announced an agreement to sell $100 million in stock to Jefferies LLC.

With in-person events canceled nationwide, Party City’s potential earnings have virtually evaporated. Since the pandemic hit, the company’s stock price has hovered between 50 and 60 cents per share, down from nearly $3 per share in late February. The party-supplies manufacturer and retailer furloughed 90% of in-store workers and 70% of manufacturing and corporate employees. As of early May, all retail locations remained closed, and there is no word as to when they would reopen, though some locations are offering curbside pickup.

While many of the companies listed here are hoping to survive the coronavirus crisis, Modell’s Sporting Goods is already gone for good. After more than a century in business, the sporting goods retailer announced in March it filed for bankruptcy and would close all stores. Ironically, the pandemic may actually keep Modell’s open longer, as the company said it halted its liquidation amid the closure of nonessential businesses. It is now seeking to postpone its bankruptcy through the end of May.

It could be difficult for Modell’s to sell merchandise if pro and amateur leagues are still not operating. Complicating matters, Modell’s only operates in the Northeast, where communities have been especially hard-hit by coronavirus.

Consumer electronics retail giant Best Buy is one of many brick-and-mortar chains that could potentially face bankruptcy during the COVID-19 crisis. Though the company reported a surge in sales of home appliances like freezers at the beginning of the outbreak, Best Buy reported a 5% decline year-over-year in sales for the nine-week period ending April 4, 2020. On April 19, Best Buy furloughed some 51,000 employees, implemented substantial executive pay cuts, and did away with several benefits for employees.

In mid-March, Best Buy suspended appliance installation service and reduced its physical location sales services to curbside pickup only. The company has yet to reinstate normal in-store shopping.

New York-based cosmetics company Revlon has reportedly been able to close a $1.8 billion refinancing package that would restructure most of its debt, according to The Business of Fashion. Revlon has been struggling with declining revenue during the coronavirus pandemic and in addition to refinancing, the company arranged a $65 million revolving credit facility in order to improve liquidity. Revlon also announced cost cutting measures, the majority of which will come in the form of layoffs. The company is one of many in an industry that has faced reduced demand even before COVID-19 has kept most Americans confined to their homes.

Gogo is an in-flight broadband connectivity provider based in Chicago. As nonessential travel has been effectively halted during the COVID-19 pandemic and airlines have grounded many of their planes, the company’s revenue has also taken a hit. As a result, in late April, the company announced plans to furlough 60% of its workforce — a total of about 600 employees. Executive pay at the company was also slashed. CEO Oakleigh Thorne said in a statement that these cuts were necessary to ensure the long-term health of the business.