Fitch's List of Retailers w/"A Significant Risk of Default"

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Fitch's List of Retailers w/"A Significant Risk of Default"

Post by J-Man »

Not sure where to put this, but since most of the retailers are "specialty," I guess I'll post it here:
More importantly, Fitch has also revised its "retail concern list" which compiles issuers with a significant risk of default within the next 12 months, and which now lists nite retailers, up from eight the last time we showed the list in April, including:

Sears Holdings
Gymboree
Nine West Holdings
99 Cents Only Stores
True Religion Apparel
Charlotte Russe
Charming Charlie
NYDJ Apparel
Vince.A
Claire’s Stores
Chinos Intermediate Holdings (J Crew Group)
Of the stores on the list I'm familiar with, the only one that surprises me is 99 Cents Only. Here is a link to the article.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by pseudo3d »

J-Man wrote:Not sure where to put this, but since most of the retailers are "specialty," I guess I'll post it here:
More importantly, Fitch has also revised its "retail concern list" which compiles issuers with a significant risk of default within the next 12 months, and which now lists nite retailers, up from eight the last time we showed the list in April, including:

Sears Holdings
Gymboree
Nine West Holdings
99 Cents Only Stores
True Religion Apparel
Charlotte Russe
Charming Charlie
NYDJ Apparel
Vince.A
Claire’s Stores
Chinos Intermediate Holdings (J Crew Group)
Of the stores on the list I'm familiar with, the only one that surprises me is 99 Cents Only. Here is a link to the article.
Not terribly surprised about 99 Cents Only--they made a pretty big push into Houston in the early 2000s, buying a large Albertsons distribution center but something happened and the division nearly died a few years later...most of the stores were closed, and today they only occupy a small handful of stores in an area far less concentrated than Family Dollar/Dollar Tree or Dollar General. Claire's is a bit surprising tho.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by architect »

pseudo3d wrote:
J-Man wrote:Not sure where to put this, but since most of the retailers are "specialty," I guess I'll post it here:
More importantly, Fitch has also revised its "retail concern list" which compiles issuers with a significant risk of default within the next 12 months, and which now lists nite retailers, up from eight the last time we showed the list in April, including:

Sears Holdings
Gymboree
Nine West Holdings
99 Cents Only Stores
True Religion Apparel
Charlotte Russe
Charming Charlie
NYDJ Apparel
Vince.A
Claire’s Stores
Chinos Intermediate Holdings (J Crew Group)
Of the stores on the list I'm familiar with, the only one that surprises me is 99 Cents Only. Here is a link to the article.
Not terribly surprised about 99 Cents Only--they made a pretty big push into Houston in the early 2000s, buying a large Albertsons distribution center but something happened and the division nearly died a few years later...most of the stores were closed, and today they only occupy a small handful of stores in an area far less concentrated than Family Dollar/Dollar Tree or Dollar General. Claire's is a bit surprising tho.
The only one of these stores which could even be remotely relevant in today's marketplace is J Crew, and that will only happen if they can push their pricing down. Although their factory stores are still successful (including their new Mercantile format which is essentially a factory store outside of a traditional outlet mall setting), their mainstream stores have moved progressively more into exclusive goods in recent years (which command higher prices), and shoppers have left in droves.

Several of these stores also compete in the same price/quality range as the fast fashion chains, so it is surprising that they are even still around at this point.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by Super S »

architect wrote:
pseudo3d wrote:
J-Man wrote:Not sure where to put this, but since most of the retailers are "specialty," I guess I'll post it here:



Of the stores on the list I'm familiar with, the only one that surprises me is 99 Cents Only. Here is a link to the article.
Not terribly surprised about 99 Cents Only--they made a pretty big push into Houston in the early 2000s, buying a large Albertsons distribution center but something happened and the division nearly died a few years later...most of the stores were closed, and today they only occupy a small handful of stores in an area far less concentrated than Family Dollar/Dollar Tree or Dollar General. Claire's is a bit surprising tho.
The only one of these stores which could even be remotely relevant in today's marketplace is J Crew, and that will only happen if they can push their pricing down. Although their factory stores are still successful (including their new Mercantile format which is essentially a factory store outside of a traditional outlet mall setting), their mainstream stores have moved progressively more into exclusive goods in recent years (which command higher prices), and shoppers have left in droves.

Several of these stores also compete in the same price/quality range as the fast fashion chains, so it is surprising that they are even still around at this point.
Claire's, and their sister store Icing, may have one of the biggest geographic reaches as they are present in nearly every major mall and many strip malls. A store like that shouldn't be struggling especially with ear piercing more popular than ever. I have been seeing boys and adult men getting their ears pierced as I walk by their stores. But we have a generation of kids not knowing a world without an online presence which is part of their target demographic. I expect them to exit second tier malls and scale back the Icing brand more (Several malls with both Icing and Claire's have seen Icing close in my area)
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by architect »

Super S wrote:
architect wrote:
pseudo3d wrote:
Not terribly surprised about 99 Cents Only--they made a pretty big push into Houston in the early 2000s, buying a large Albertsons distribution center but something happened and the division nearly died a few years later...most of the stores were closed, and today they only occupy a small handful of stores in an area far less concentrated than Family Dollar/Dollar Tree or Dollar General. Claire's is a bit surprising tho.
The only one of these stores which could even be remotely relevant in today's marketplace is J Crew, and that will only happen if they can push their pricing down. Although their factory stores are still successful (including their new Mercantile format which is essentially a factory store outside of a traditional outlet mall setting), their mainstream stores have moved progressively more into exclusive goods in recent years (which command higher prices), and shoppers have left in droves.

Several of these stores also compete in the same price/quality range as the fast fashion chains, so it is surprising that they are even still around at this point.
Claire's, and their sister store Icing, may have one of the biggest geographic reaches as they are present in nearly every major mall and many strip malls. A store like that shouldn't be struggling especially with ear piercing more popular than ever. I have been seeing boys and adult men getting their ears pierced as I walk by their stores. But we have a generation of kids not knowing a world without an online presence which is part of their target demographic. I expect them to exit second tier malls and scale back the Icing brand more (Several malls with both Icing and Claire's have seen Icing close in my area)
The biggest issue for Claire's is overexpansion, like you mentioned. However, even if they are able to scale back their store base, a big hurdle remaining is the fact that younger shoppers are essentially ignoring malls altogether, and there is no real way for them to remarket their stores towards an older/more mature demographic. Most older teenagers/adults are more likely to frequent local piercing shops than a tween retailer like Claire's. Personally, I don;t see a viable path forward over the long haul.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by Super S »

architect wrote:
Super S wrote:
architect wrote:
The only one of these stores which could even be remotely relevant in today's marketplace is J Crew, and that will only happen if they can push their pricing down. Although their factory stores are still successful (including their new Mercantile format which is essentially a factory store outside of a traditional outlet mall setting), their mainstream stores have moved progressively more into exclusive goods in recent years (which command higher prices), and shoppers have left in droves.

Several of these stores also compete in the same price/quality range as the fast fashion chains, so it is surprising that they are even still around at this point.
Claire's, and their sister store Icing, may have one of the biggest geographic reaches as they are present in nearly every major mall and many strip malls. A store like that shouldn't be struggling especially with ear piercing more popular than ever. I have been seeing boys and adult men getting their ears pierced as I walk by their stores. But we have a generation of kids not knowing a world without an online presence which is part of their target demographic. I expect them to exit second tier malls and scale back the Icing brand more (Several malls with both Icing and Claire's have seen Icing close in my area)
The biggest issue for Claire's is overexpansion, like you mentioned. However, even if they are able to scale back their store base, a big hurdle remaining is the fact that younger shoppers are essentially ignoring malls altogether, and there is no real way for them to remarket their stores towards an older/more mature demographic. Most older teenagers/adults are more likely to frequent local piercing shops than a tween retailer like Claire's. Personally, I don;t see a viable path forward over the long haul.
And those piercing/tattoo shops seem to be popping up in more malls, which provides an alternative source for those services, something that would certainly affect Claire's.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by storewanderer »

99 Cents Only seems to be in trouble. This is a chain that would be better off privately owned. They seem to keep changing their strategy on selling "over 99 cents" items. I recall 3-4 years ago some new management showed up and pushed a ton of "over 99 cents" items and it flopped big time and they retracted on it (save for gallons of milk and cases of water which stuck around after) and started posting signs that said "most items back to 99 cents just like before" or similar wording. Now the current new management, at least one of which is a former Albertsons person, is doing a similar thing of adding in more "over 99 cents items" to the stores again primarily at the 1.99, 2.99, and 4.99 price points, nothing in between. I will admit their "over 99 cents" items are still a good value and I have bought some of them but it undermines the entire concept of the store.

Lately the 99 Cents Only Stores in my market are not stocked as well (high shelves on the wall are empty) and the stores continue to struggle with poor conditions and a lot of rotten produce on the displays (these stores are in Reno and Sparks, NV). They are also often out of stock on bread products lately, or have nothing but 1-2 types that nobody even wants to buy (the 16 ounce wheat loaves are often the only thing they have). They have however improved their checkout service and usually maintain a 2-3 line length which is a big improvement over the past when they routinely had lines 5-6 customers long. I am not sure why but 99 Cents Only in Reno and Sparks runs dirty, dingy stores with very unkempt displays, indiffernet employees, and rotten produce yet the locations in and around Sacramento are sparkling clean, neat, with friendly employees, and very ripe produce.

This is a store I will miss very much if it goes away.

They also do a fair lot of business with Unified so it will be interesting to see how the Supervalu transaction impacts them.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by Knight »

Sears Holdings does not surprise me. The other retailers are designer, trend, and fashion retailers.
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Re: Fitch's List of Retailers w/"A Significant Risk of Default"

Post by SamSpade »

Interesting how the stock market doesn't see the forest through the trees when it comes to Sears Holdings:
http://www.bbc.com/news/business-40047276
Interesting that Best Buy is claiming their gaming products are leading to their strong sales. Maybe new console purchases? (Nintendo Switch)
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