Big companies go bankrupt for plenty of reasons, and corporate bankruptcies happen on a regular basis. In the past few years, bankruptcies by well-established brands became commonplace as they struggled to compete with the rise of online giants. This mass bankruptcies of retailers became known as the “retail apocalypse.” These companies didn’t experience the huge bailouts several companies get, either.
Some of the companies that went bankrupt were able to come out of bankruptcy with a new strategy. Some, however, shuttered their doors and no longer exist. Read on to learn more about the different companies that went bankrupt, why, and whether or not they were able to emerge in one piece with data via The Fashion Law and CB Insights.
37. Wet Seal
Wet Seal sells trendy, low-cost clothes for young women. After a slew of financial troubles, the company announced that it would keep its stores open. However, in January 2015, it began closing stores, and shares fell to $0.06 per stock. That month, it went bankrupt. Wet Seal came out of going bankrupt, but it was all the worse for wear. The company Versa bought Wet Seal, but the company was unable to meet Versa’s private equity demands. Wet Seal went bankrupt again just two years later.
In January 2017, Wet Seal closed all of its stores and immediately terminated all of its workers. The troubled brand was one of many retail chains that fell in the retail apocalypse. Wet Seal went bankrupt again in February 2017. It cited having debts as much as 10 times higher than its assets. Gordon Brothers acquired the company in bankruptcy proceedings and relaunched it in October 2017 with online-only retailing.
Cache was a New York-based brand with more styles. Still, it collapsed just after the aforementioned Wet Seal, going bankrupt in February 2015. By that time, it had not seen a profit in over two years and had 10 times as many liabilities as assets.
Cache began to close its 218 stores, and the brand has since become obsolete. However, plenty of mall shoppers have fond memories of the Armani-based designs that the franchise popularized before it became financially bankrupt
If you lived in the 1990s, you probably remember Radio Shack. The store sold electronics from wireless radios to cell phones. Radio Shack went under in 2015 because of the growing competition. Stores like Best Buy and Amazon were able to provide the same services for cheaper than Radio Shack. It went bankrupt in 2015. Since then, the name Radio Shack has been acquired by General Wireless Operations.
After it first went bankrupt in 2015, Radio Shack emerged as a private corporation. Part of the bankruptcy proceedings included selling the Radio Shack name so that different companies throughout the world can operate under the Radio Shack name. So while you may see Radio Shack stores in different countries, they are not operated by the same company that sold you your first Nokia battering-ram phone. In March 2017, after being acquired by General Wireless Inc., Radio Shack went bankrupt a second time. Its partnership with Sprint had not been nearly as profitable as management and investors had anticipated, and almost all Radio Shack stores in the United States closed. The company now operates as an online retailer.
This Boston-based clothing company specialized in hip-hop streetwear. However, in 2015, it went bankrupt because of some ill-fated ventures. The CEO later revealed that the brick-and-mortar store on Newbury Street had never made a profit and all sales had come from online.
Karmaloop had attempted to branch out into television but failed, causing its debts to mount up to $100 million. CapX Partners and Comvest Capital soon bought the company out of bankruptcy and sold it to Shiekh Shoes, which still owns the brand. Today, you can still buy Karmaloop clothing, and hip-hop stars like Kanye West even promote it. It actually survived going bankrupt.
The company that specialized in provocative women’s lingerie went private in 2014 after facing a steady decline. Its retail stores had shrunk from a peak of more than 200 to a low of 94, and its stock value was declining. In April 2015, Frederick’s of Hollywood filed for bankruptcy protection while closing all of its stores.
By the time Frederick’s went bankrupt, it had $36.5 million in assets and $106 million in debts. It also had not had a profitable quarter in nine years. The Authentic Brands Group bought out Frederick’s, and it now operates solely through a website.
Better known as A&P, the Great Atlantic and Pacific Tea company was a franchise of grocery stores. The franchise opened in 1859 and was the largest US retailer until 1965.
Nevertheless, in 2015, owing at least in part to competition from newcomer behemoths like Amazon, A&P went bankrupt for the second time in five years. It sold 125 of its stores and closed an additional 25 to restructure its finances and pay off debts. All of its stores then closed the day before Thanksgiving.
This Maine-based jewelry store became an industry leader until 2015 when it went bankrupt. Local shoppers were greeted by a giant window sign that said “Going Out Of Business, Up To 70% Off,” as the company liquidated in an attempt to pay off creditors.
In July 2015, the company filed for chapter 7 bankruptcy and announced it would close all of its stores. Customers who had purchased jewelry through GM Pollack and Sons no longer had a company to go through to make a warranty claim if there was a problem with their purchases.
The franchise that specialized in surfer apparel was a favorite for mall rats, particularly in coastal areas. However, the rise of low-cost fashion combined with the 2008 Great Recession caused the company to lose business. It also opened too many stores that relied heavily on surfer wear when the fashion industry was shifting to trendy fashion.
In September 2015, Quiksilver succumbed to its financial woes and went bankrupt. After restructuring its $800 million in debts, it went private, with Oaktree Capital as the majority shareholder. It rebranded itself as Boatriders, which now owns the brands Roxy, DC Shoes, Element, Billabong, Von Zipper, XCEL, RVCA, and, of course, Quiksilver.
The sportswear and equipment company was founded in Boston in 1983 and grew to a national franchise through the 1980s-90s. In 2008, Highland Consumer Fund acquired the company and planned to open 300 stores across the country. However, that same year came the Great Recession.
By 2015, instead of 300 City Sports stores, there were only 27. In October of that year, City Sports went bankrupt and announced it would close all of its stores. In 2017, the company was acquired by Brent and Blake Sonnek-Schmelz, who decided to open only 10 City Sports stores with a focus on urban markets and fitness.
The franchise that specialized in selling trendy clothes found it was unable to keep up with trends in the fashion industry and increasing competition from retail giants. In October 2015, American Apparel went bankrupt. American Apparel had not turned a profit since 2009. Management restructured its debt with its creditors and continued to operate as it had been before. The only problem was that had been unprofitable for years.
American Apparel had already declared chapter 11 bankruptcy in 2015 because it was not profitable for years and wouldn’t be able to sustain operations for another 12 months. In November 2016, less than a year later, it wentbankrupt again. American Apparel branded itself as manufacturing all of its clothes in America, while other companies were saving money by outsourcing to overseas companies. Canadian-based company Gildan bought American Apparel and rebranded it with the tagline, “Globally Sourced, Ethically Made, Still Sweatshop Free. That’s American Apparel.”
In 2006, Dallas-based petroleum firm Alon purchased 40 Good Times convenience stores that had fallen on hard times and turned them into 7-11s. However, some of the West Texas convenience stores survived temporarily.
In November 2015, Good Times went bankrupt as itcexperienced declining sales. By the time Good Times went bankrupt, it had twice as much debt as assets. With the further decline in profits, it had little chance to become financially solvent.
Tamara Mellon helped found the Jimmy Choo brand of luxury shoes before launching her own fashion franchise. Her designs included handbags, shoes, and clothing. But in December 2015, Mellon went bankrupt as the business was no longer profitable and was succumbing to the pressures of giants like Amazon.
The fashion company reorganized its finances so it could relaunch. During the bankruptcy process, Tamara Mellon was able to retain all of its employees and continue trading for 60 days. After securing new funding, it relaunched in the summer of 2016 as an online store.
The New Jersey-based clothing store had focused so much on its brick-and-mortar stores – a relic of the past – and failed to keep up with online retail. After 65 years of operation, Joyce Leslie went bankrupt in January 2016.
The company looked for a buyer to take over the brand but was not able to find one within the 30-day allotted period. It began to liquidate all of its holdings, including merchandise and corporate leases, to pay off its creditors. Joyce Leslie closed its doors soon after.
Hancock Fabrics was a Mississippi-based retailer that specialized in sewing equipment. Yet with the growth of general craft stores, such as Jo-Ann Fabrics and Crafts, Hancock Fabrics was unable to remain competitive.
It first went bankrupt in 2007 but came out to continue operations. However, in February 2016, Hancock Fabrics went bankrupt a second time and could not find a buyer to take over the business. It sold the brand to Michaels, the art supply giant, which expected to be able to access Hancock’s customer data and find its way into the sewing business. All stores closed down.
The Colorado-based sportswearfranchise had been operating since 1928 before falling prey to retail giants. Not only was Amazon chipping away at Sports Authority’s sales, but also companies such as the NFL and NBA that were selling licensed sports teams’ merchandise.
In February 2016, Sports Authority went bankrupt with the intent of reorganizing its debts and relaunching. Dick’s Sporting Goods and Academy Sports + Outdoors showed some interest in buying Sports Authority, but chose not to. Sports Authority then went into chapter 7 bankruptcy and liquidated its assets. Dick’s Sporting Goods won an auction for the branding and intellectual rights of Sports Authority. All Sports Authority stores have since closed.
Pacific Sunwear specialized in surfwear and beachwear. However, trends in the industry were geared towards fast fashion and cheap, trendy clothes. PacSun was unable to keep up. Additionally, it had unsuccessfully attempted to expand during the Great Recession and took huge losses.
After not being profitable for eight years and seeing its shares tumble by 96%, PacSun went bankrupt in April 2016. The company managed to reorganize its finances and relaunched in September of that year. It now focuses more on online sales, which is where much of the market is today.
Aeropostale was a favorite for teenagers in the 1990s and 2000s with clothes that were moderately priced. Nevertheless, fast-fashion stores, such as Forever 21, Zara, and H&M, were able to sell comparable merchandise at lower prices and respond more quickly to fashion trends.
In May 2016, Aeropostale went bankrupt and intended to close 100 stores as part of its restructuring process. At its height, there were 800 Aeropostale storefronts across the country. By the time the company emerged from going bankrupt in September 2016, it had only 229 storefronts in operation.
Vestis Retail Group was the parent company that owned Eastern Mountain Sports, Sports Chalet, and Bob’s Stores. The company filed went bankrupt in April 2016 and planned to close all Sports Chalet stores so it could focus on the more profitable Eastern Mountain Sports and Bob’s Stores.
The Sports Chalet stores immediately began liquidating their merchandise and shutting their doors. Eastern Mountain Sports and Bob’s Stores remained open, though many of the storefronts closed. In 2017, Sports Direct acquired both Eastern Mountain Sports and Bob’s Stores, saving more storefronts from closing.
Nasty Gal is a tale of rags and back to rags. The company began in 2006 as a home-based eBay store when founder, Sophia Amoruso, began selling vintage secondhand items she found in flea markets and thrift stores. By 2012, the national franchise was the fastest-growing retailer.
Fast-forward just a few years, and the company was on the receiving end of lawsuits that claimed employee discrimination and infringement of intellectual property rights. Sales began sliding just as dramatically as they had risen a few years before. In 2016, Amoruso resigned as CEO, and a few months later, Nasty Gal went bankrupt. UK-based firm Boohoo.com purchased Nasty Gal out of chapter 11 bankruptcy and remained based in Los Angeles.
This East Coast-based fitness store specialized in yoga wear opened in Connecticut before expanding its storefronts in California. However, Manhattan-based Bain Capital and Jones Family Office, which had been expected to invest $35 to $40 million in the company, didn’t come through with the financing.
The company’s revenue grew, but without the expected financing, it was unable to pay its retail bills. It involuntarily went bankrupt when some of its creditors called in $3.2 million in debts. The company restructured so that only one storefront remained open in La Jolla, California. The rest of its operations take place online.
Bibhu Mohapatra, based in New York, is a fashion and costume designer whose work has been featured in several high-profile publications. He specialized in luxury designs for women and has been featured in New York’s Fashion Week.
Nevertheless, in January 2017, Mohapatra also fell prey to the so-called “retail apocalypse.” He went bankrupt, claiming that the process of restructuring the company’s finances will make it more appealing to investors. He planned to launch a more affordable line of clothing to take him out of the exclusive luxury market.
The Limited was a women’s clothing brand that specialized in classic styles suitable for professional women. However, the rise of fast-fashion retailers along with the retail giant Amazon caused its sales to decline, as the appeal of cheap, trendy clothes overwhelmed the perceived value of classic pieces.
By late 2016, the effects of fast fashion were causing The Limited to make some hard decisions, including laying off many of its corporate workers. In January 2017, the company went bankrupt and closed all its stores. It relaunched with a focus on plus sizes and online retailing but has since permanently ceased operations.
Coming out of the Vestis bankruptcy a year earlier, which had affected the holdings of Eastern Mountain Sports and Bob’s Sports, Eastern Outfitters company was part of the Vestis reorganization. Moreover, soon after Vestis went bankrupt, Eastern Outfitters went under, too.
Customer spending habits in the sports and outdoor industry had changed dramatically, and Eastern Outfitters was not structured in a way it could manage those changes. Competition from other major sports retailers, including Dick’s Sporting Goods and, of course, Amazon, put pressure on flailing sales. Eastern Outfitters went bankrupt in February 2017. British firm Sports Direct acquired some of its assets including Eastern Mountain Sports and Bob’s Sports.
One challenge of the online retail environment is that companies have to clearly differentiate their brands from other brands, often on a national or even international scale. BCBG was a favorite for special-occasion dresses, but in the online retail environment, it was unable to differentiate itself enough to compete.
Additionally, the rise of fast-fashion brands and retail giants squeezed BCBG to the point of going bankrupt in February 2017. With nearly half a billion dollars in debt and many unprofitable storefronts, BCBG closed many of its stores. It was acquired by Marquee Brands and Global Brands Group Holding Ltd. and relaunched with an emphasis on online retail.
Vanity was a retailer of women’s clothing that did most of its business in shopping malls. Changing consumer habits, including turning to online shopping instead of going to a mall, led to Vanity going bankrupt in March 2017.
Without finding a buyer and securing a future post-bankruptcy, Vanity soon closed down all of its stores and posted online it was liquidating all of its inventory. 140 stores closed around the country and 1400 employees lost their jobs. Vanity was one of many brick-and-mortar retailers that were unable to adapt to the online retail environment and the immense changes in customer spending habits that it caused.
While the most high-profile bankruptcies of the retail apocalypse have been clothing stores, they’re far from the only casualties of changing consumer habits and fierce competition from retailers like Amazon. HH Gregg was a supplier of home appliances and consumer electronics, and it also went bankrupt.
HH Gregg filed for chapter 11 bankruptcy in March 2017, having been unable to remain financially solvent with stores like Best Buy eating away at the market Amazon left. It soon went into chapter 7 bankruptcy and began closing all of its stores and liquidating its merchandise. Valor LLC bought the company, and it emerged from bankruptcy as an online-only brand. However, it may soon open stores again.
Clothing stores, electronics stores, and appliance stores all went under during the retail apocalypse. Sports and outdoors stores also felt the heat. Many of them went into bankruptcy, and some closed altogether. Gander Mountain was yet another sports and outdoor company that and went bankrupt during the retail apocalypse.
In March 2017, Gander Mountain filed for bankruptcy protection so it could reorganize, rebrand, and relaunch. It closed 32 underperforming stores as part of bankruptcy proceedings and was acquired by Camping World. In the time since, Gander Mountain has relaunched as Gander Outdoors.
Gordmans is a discount department store that, for a long time, was able to hold its own against its more expensive brick-and-mortar competitors. However, the rise of online retail meant fewer people went to the discount store even with the bargains that Gordmans had.
In March 2017, Gordmans went bankrupt and struck a liquidation deal. Stage Stores bought one of the Gordmans distribution centers and 48 of the stores. Stage Stores rebranded Gordmans to compete with discount department stores such as Ross and TJ Maxx and has since converted some of its other stores to the Gordmans name.
Most of us have memories of our parents or relatives taking us to Payless Shoes to buy inexpensive footwear we would quickly outgrow. Despite its discount prices, Payless Shoes became a global powerhouse in the shoe market. At the same time, it began to accumulate massive debt between one billion and 10 billion dollars.
Payless Shoes went bankrupt in April 2017, citing that part of its financial challenges came from changes in the retail environment. It has since reopened with a new strategy that focuses on stores in Hispanic countries, a more streamlined management culture, and a different pricing structure.
The retail apocalypse was not limited to American brands, as longstanding British brand Jaeger also went bankrupt in 2017. In the United Kingdom, the bankruptcy process is different than in the United States and involves a government body appointing administrators to restructure the company. Jaeger went into administration in April 2017.
Jaeger has a long history of providing high-end clothes to Brits including Kate Middleton. Its woes came not only from changes in the shopping culture but also from the rise of trendy fast-fashion chains including H&M and Zara.
Fast-fashion stores led to the demise of many longstanding brands such as The Limited and Joyce Leslie during the retail apocalypse. Furthermore, many of the fast-fashion brands fell to it, as well, including Wet Seal and Rue 21. Rue 21 provided trendy clothes for teenagers and young women at 1,100 mainly mall-based stores across the country.
In May 2017, Rue 21 went bankrupt with over a billion dollars in debt amid declining sales. The company cited problems, including strategy, merchandising, and fulfilling online orders. It emerged from bankruptcy after four months, having received new investments and restructured its finances.
Papaya Clothing provided clothes for teenagers and was one of the fast-fashion brands that arose in the early 2000s, having opened its first store in 1999. Between 2011 and 2017, instead of shifting its focus to online retail, the company opened 50 new brick-and-mortar stores that did not perform nearly as well as management had hoped.
The expansion strategy took a massive financial toll, and in May 2017, Papaya Clothing went bankrupt. By February 2018, it had negotiated agreements with creditors to pay its debts and closed some stores. A judge agreed to let Papaya Clothing come out of bankruptcy proceedings.
Most shopping malls in the United States had a Gymboree store that sold moderately priced children’s apparel. But in June 2017, Gymboree went bankrupt. Over the next few months, it renegotiated with creditors and was able to eliminate one billion dollars of debt.
Gymboree came out of bankruptcy in September, having been reorganized as The Gymboree Group. It closed approximately 300 underperforming stores to adapt to the online retail environment. It came up with a new plan that would focus more on online sales and appeared to have a secure future among its loyal customer base.
True Religion specialized in high-quality denim, targeted to customers who wanted to have a few pairs of jeans that they were willing to pay $200 to $400 for. However, the rise of fast-fashion and trendy apparel with a quick turnaround turned consumer habits away from high-quality classic pieces that would last for years.
After being unable to compete with low-price retailers under its current structure, True Religion filed for bankruptcy in July 2017. It had over $500 million in debts, twice what it held in assets. As part of the proceedings closed down 27 of its brick-and-mortar stores. It came out of bankruptcy in October 2017 with a focus on online retailing.
The rise of low-cost bridal dresses, mainly through David’s Bridal chain, hit the wedding-dress market particularly hard. Alfred Angelo, a long-time supplier of higher-end wedding dresses, went bankrupt in July 2017, causing a frenzy among brides-to-be who had ordered dresses from Alfred Angelo.
David’s Bridal picked up the slack, giving it an even larger share of the wedding-dress market by announcing it would fulfill orders left by Alfred Angelo. Having gone into chapter 7 bankruptcy, the company had to liquidate all of its assets to pay creditors before closing its stores.
Perfumania went bankrupt in August 2017, making it yet another casualty of the retail apocalypse. Corporate losses fell by nearly $500 billion in 2016, and shares had dropped from $1.53 to $0.75. In bankruptcy, the company was restructured under NewHoldCo, a private firm that organized to take over Perfumania while it went through bankruptcy proceedings.
During the proceedings, Perfumania agreed to close 65 of its 227 stores, citing supply-chain inefficiencies that created unnecessary costs for the company. It came out of bankruptcy as a private company that focused on its better-performing stores and online sales.
Virtually every single sector of the retail market took a serious blow during the retail apocalypse. Even with the rise of health-conscious shopping, Vitamin World took a huge hit.
Vitamin World went bankrupt in September 2017, citing inefficiencies in the supply chain. People turning to Amazon for vitamins and other health products undoubtedly also played a role in the company’s financial woes. Vitamin World received court permission to close upwards of 100 stores and was later bought by the Chinese manufacturer Feihe.