Retail defaults hit record high in first quarter, Moody’s says

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

According to Moody’s, the number of retailers defaulting on loans hit a record high in the first quarter of 2018, a new report shows, affirming many chains in the sector are still struggling under suffocating debt loads and changing business needs.

There were 28 total defaults by corporations in the latest period, Moody’s Investors Service found, compared with 23 defaults during the same period a year ago. Nine of the 28 defaults were by retailers. (See the complete list below.)

Here are the 9 retailers globally that defaulted during the first quarter of 2018, according to Moody’s:

Bon-Ton Stores
Sears Holdings
Claire’s Stores
Tops Holding
BI-LO
BrightHouse Group PLC
Charlotte Russe
Tops Holding II
BI-LO Holding Finance

Many retailers are still grappling with the debt load left behind from the private equity buyout boom several years ago. Meanwhile, all retailers are faced with the expensive task of investing in e-commerce, a business that without the right store footprint can eat into profits.

The latest retail defaults’ come from Claire’s Stores, which just filed for Chapter 11 bankruptcy protection last month, and Sears Holdings. The department store recently completed a distressed debt exchange, which Moody’s considers a default.

“Stresses in the retail sector have weighed on the operating earnings of department stores, discount stores and drug stores in particular,” said Sharon Ou, vice president and senior credit officer at Moody’s.

CNBC reported last month that Moody’s is expecting retailers’ maturities to spike in 2019, meaning many significant debts are coming due. Companies on that list with loans to pay include Sears, Neiman Marcus and Guitar Center. These companies are also targeted as ones that could struggle to refinance or fund their loans.

Say, if Guitar Center is going bye-bye, someone snag me a deeply-discounted Gibson SG in Heritage Cherry!

gibsonsg.png

 

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply