Seven Retailers on the Financial Brink
Teen-oriented retailers haven't fared well in the recession as the spending power of their target demographic was reduced. Many lost part-time jobs to older workers and parents were hard pressed to spend much beyond the necessities. American Eagle and its like -- Abercrombie & Fitch and Aeropostale -- have retooled and survived the downturn. Now each has been the subject of takeover rumors.
The maker of U.S.-made hipster wear has struggled to pay its bills and stay afloat, and recently named a new chief financial officer to help sort things out. It's unclear if American Apparel can survive both its fiscal challenges and the many scandals its founder, Dov Charney, finds himself in. Begging the question: will Americans really buy American apparel?
BJ's Wholesale Club is much loved by its customers -- judging from the many comments Walletpop readers leave on any warehouse club story -- but its tough for a regional retailer to compete with national chains like Costco and Sam's Club. In January, BJ's said it was exploring "strategic alternatives" including a possible sale of the chain. Business hasn't been exactly robust of late, but BJ's is considered an attractive takeover candidate. It may not disappear, but rather be acquired. Either way, it won't be quite the same.
The movie rental chain filed for Chapter 11 bankruptcy protection late last year, but its ability to restructure and emerge is increasingly in question, as investors seek to get whatever value they can out of the company by selling off remaining assets.
Borders Books filed for Chapter 11 bankruptcy protection and immediately announced plans to close 30% of its store base, or 200 locations. It's re-examining its product mix and will likely reduce or eliminate many items, including music, movies and accessories. If the company can emerge from bankruptcy, it will be vastly different, and the empty storefronts it leaves behind will alter commercial strips and communities, too.
RadioShack is an iconic American brand, one consumers feel both an affinity for and great disconnection to as of late. We've failed to take to the new "Shack" and no longer see it as the best source for parts, accessories and mobile communications; the product categories that built the business. The retailer is losing its CEO and looking for relevancy and profits in an increasingly difficult retail landscape. Whether it's a takeover target or a bankruptcy risk, the RadioShack of old is gone forever.
The apparel retailer was once applauded, and financially rewarded, for catering to women over 50 with conservative, classic clothing. No more. Talbots has struggled to turn that focus into profits and failed to woo younger women or remake itself as a fashion destination with celebrity models. The retailer just lost a key executive, and in spite of heavy discounts during the holidays, December sales were weak, and an investor has filed suit against the company alleging that Talbots failed to disclose adverse information about its financial situation. Survival is unclear.