So far this year, the Retail Apocalypse (which just got its own Wikipedia page) has claimed 6,800 storefronts and triggered more bankruptcy filings than the 2008 financial crisis. But, according to a recent chart-laden horror story from Bloomberg, this is only the tip of the iceberg and things are about to get much, much worse.
“If today is considered a retail apocalypse, then what’s coming next could truly be scary,” the story says.
In 2018, $1.9 billion of high-yield retail borrowings are set to mature, and from 2019 to 2025, that number “balloons to an annual average of almost $5 billion.”
(For context, Toys ”R” Us couldn’t refinance $400 million of its $5 billion debt, which led it to file for bankruptcy in September.)
Further putting a strain on things is a disturbingly strong concentration of delinquent retail real estate loans in major metro areas.
And while all of this comes at a time when “there’s sky-high consumer confidence, unemployment is historically low and the U.S. economy keeps growing” – all ingredients for a prospering retail economy – the retail industry in the US is so overextended, and so levered up, that literally nothing is helping.
“The reason isn’t as simple as Amazon.com Inc. taking market share,” the story says, “or twenty-somethings spending more on experiences than things,” it’s the debt.
“The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy.”
Low-income workers will be displaced. Lost tax revenue will deplete local government budgets. Investors will take huge losses on all sides. In other words, it’ll be a total fucking mess.
At least we have a president who’s equipped to handle this looming crisis. Oh, wait…
You can read more about it at Bloomberg.