According to the latest retail report from Moody’s investors Service, the number of distressed American apparel and accessories brands is nearing recession-era levels.
13.5% of the retailers in Moody’s retail and apparel portfolio are categorized as “distressed,” which is not far behind the 16% reported during the Great Recession. In their article about the report, Retail Dive attributes the surging numbers to “stressed liquidity, weak quantitative credit profiles, challenged competitive positions, sponsor ownership and erratic management structure.” Some of the companies currently at risk of shuttering include J.Crew, True Religion, and TOMS.
In equally grave news, Business Insider is reporting that 30% of American malls are on the brink of collapse, and is predicting that several hundred “C- and D-rated malls” will close or become irrelevant over the next 10 years. 1500 store closures have already been announced in the last three months alone, by brands including JCPenney, Macy’s, Sears, American Apparel, The Limited, and Abercrombie & Fitch.
In light of these dire circumstances, many of the aforementioned companies have become engaged in a race to the bottom in which they, as Retail Dive describes it, are discounting “to the point of irrationality.”