The retail apocalypse: traditional retail chains are dying across America

Four months after Forever 21 filed for bankruptcy in September, the company will likely be sold for $81 million to licensing company Authentic Brands Group and retail property landlords Simon and Brookfield, according to a bankruptcy court filing.

Forever 21 is requesting court approval to name the three companies as the lead “stalking horse” bidders of a court-supervised bankruptcy auction. This means Authentic Brands, Simon, and Brookfield have set the lowest initial bid — $81 million — on the retailer, although rival bidders can make a higher counteroffer for Forever 21’s assets.

Bankruptcy leaves the impression of utter failure, and when a company goes bankrupt, it’s easy to assume that it’s dead, may it rest in peace. According to this line of thinking, here’s an alarming tidbit: If you regularly travel by plane, there’s a decent chance you’ve flown with an airline that was bankrupt at the time. United filed for bankruptcy in 2002, followed by Delta in 2005 and American Airlines in 2011.

While bankruptcy can result in the liquidation or sale of a company, it also presents an opportunity for it to restructure while continuing to operate, suspend or reconfigure debt payment, and get back on its feet, so to speak. That was the case for United, Delta, and American, which all exited bankruptcy in less than four years. Since 2017, we’ve seen a wave of once-powerful retailers going the same route, like Sears, Mattress Firm, the clothing brand BCBG, and the accessories chain Claire’s.

Amazon is closing all of its 87 “pop-up” stores, the Wall Street Journal reported on Wednesday.

The stores, which mostly operate as small kiosks in malls, Kohl’s department stores, and Whole Foods locations, have been part of Amazon’s retail strategy since 2014. Ailing malls, many of which have lost “anchor” retailers in recent years, have benefited from the kiosks, which sell Amazon-branded tech like Alexa speakers and Kindle e-readers and bring in much-needed foot traffic. (The “mallpocalypse,” as it’s been dubbed, is largely due to the rise of online shopping — something Amazon has obviously played a huge part in shaping.)

This week, Dollar Tree Inc., the parent company of the budget stores Dollar Tree and Family Dollar, said it will close 390 Family Dollar stores in 2019. The news comes on the heels of the company trying to revamp these stores last year to make them more exciting for shoppers, but the closures signal how hard it is to turn around a struggling brand in today’s retail landscape.

Dollar Tree and Family Dollar are budget-friendly stores, known for selling groceries, accessories, and home goods at prices that start at $1 and don’t typically go past $10. The two stores used to be rival discount chains, but in 2015, Dollar Tree bought Family Dollar for $8.5 billion. The acquisition gave Dollar Tree a total of 13,000 stores total, in the US and Canada, with about $19 billion in yearly revenue.

Payless ShoeSource has filed for bankruptcy and is closing all its US stores — 2,500 across the country and in Puerto Rico.

The company confirmed the news to CNN Business on Friday and announced the closures on Saturday. Liquidation sales began the following day and will continue through May, a spokesperson told CNN, though some stores will begin closing in March. Payless filed for bankruptcy on Monday night, CNBC reports, and has approximately $470 million in outstanding debt.

Eddie Lampert, the billionaire hedge fund manager who served as CEO of Sears from 2005 until the company filed for bankruptcy in 2018, was responsible for many of the decisions that led to the company’s decline and eventual insolvency. Now he’s pulling Sears back from the brink of liquidation — and saving himself from liability — according to a report by the Wall Street Journal.

According to the Journal’s report, Lampert’s $5 billion offer beat out a bid that was supported by most of Sears’s creditors and landlords but would have shuttered all Sears stores and led to tens of thousands of job losses. Lampert’s plan, meanwhile, will keep approximately 400 stores open — but it also underscores how Lampert, who in addition to being Sears’s CEO was its biggest shareholder and creditor, was able to benefit from the company’s decline, and how he may continue to do so. Lampert’s hedge fund, ESL Investments, reportedly owns 40 percent of Sears’s debt; his offer included a $1.3 billion debt forgiveness package, but it also stipulated that he and others be released from liability related to actions that may have devalued the company, the Journal reported.

By many metrics, 2018 was a rough year for brands. In a politically divided, financially tumultuous time, a victory with one audience might necessitate alienating another, while a business-savvy move could mean triggering customer outrage. Balancing the concerns of modern shoppers has never been trickier. Even some of this year’s “winners” felt the burn.

Companies saw store and brand closures, the loss of consumer trust and loyalty, and mounting concerns about privacy, politics, and sustainability. From J.Crew to Toys R Us, from Ivanka Trump’s eponymous brand to Burberry to Facebook, major brands felt the sting of 2018 in a variety of ways: pain apparent in their bottom lines and more philosophical wounds that could shape business for years to come.

Sheila Brewer had been working at Kmart in Rockford, Illinois, for 17 years as a data and customer service lead when her district manager announced in April that the store would shutter in September.

Sears, Kmart’s parent company, was once a thriving American department store, but saddled with debt and declining sales, it had been dying a slow death for years. The 47-year-old Brewer heard there were Sears and Kmart store closures, but she didn’t think trouble would hit her store, which she says was always quite busy.

After a bitter, months-long battle, tens of thousands of former Toys R Us employees who were laid off over the summer without any severance or benefits have finally received some good news. Two of the private equity firms that used to own the defunct toy store have allocated $20 million to a severance fund that will be distributed in the coming months.

KKR and Bain Capital have each contributed $10 million to the “TRU Financial Assistance Fund.” The money is intended to “provide some monetary relief and appreciation to the employees of the U.S. business, many of whom worked for the company for more than a decade,” according to a statement emailed to Vox. (The statement did not say how much money individual employees would receive.)

Editor’s note: This article was originally published in 2018.

If you want to understand “retail death” — and I’m using quotes here because the concept of buying and selling things is very much alive — all you have to do is look at one very specific street.

Sears, once the biggest retailer in the US, is filing for bankruptcy and closing more than 100 stores across the country. The 125-year-old retailer has been in decline for years and is no stranger to store closings, but the company’s bankruptcy doesn’t mean Sears is gone for good.

The Wall Street Journal reported last week that Sears had hired an advisory firm to prepare a bankruptcy filing, causing the company’s stock price to plummet. Sears, which started out as a mail-order watch business, was founded in the late 19th century and quickly ballooned into a retail giant known for its catalogs.

Earlier this summer, the iconic American toy store Toys R Us closed almost all 800 of its stores. The brand was deep in debt and had filed for bankruptcy in September 2017. As part of the liquidation of assets, it had plans to auction off its intellectual property, including the company’s name, website, and its brand mascot, Geoffrey the Giraffe. Shoppers believed the beloved store was gone for good.

Now, though, it seems Toys R Us might not die along with our childhood dreams after all: In court documents filed this week, which were first obtained by the Wall Street Journal, the company said it was going to abandon the sale of the Toys R Us name and branding, and hold on to them instead. On Tuesday, the company issued a press release, sharing that some of its existing owners — although it did not specify which ones — wanted to hold on to its intellectual property because they were currently drumming up ways to resurrect the brand “in a new and re-imagined way.”