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Bankruptcies in 2018 – how many more to drown in red ink?

“No matter how big a company is, one has to always look at business basics.” – Tarun Sharma, CEO, BMC Software India. Also, it has to change its business strategy and plan well to withstand the competition. 2017 was a year of bankruptcies and 2018 seems to have taken up the baton. Several popular businesses have filed for bankruptcy so far this year. Here are just a few:

Claire’s

The latest company to file for bankruptcy is Claire’s, the teen jewelry chain, which has been struggling with sluggish sales due to online shopping trends along with a massive debt. Claire’s operates in a majority of U.S. shopping malls with more than 5,000 locations in the country.

The retailer, which has more than 7,000 stores in several countries, is not planning to close any of its locations at present. Even though Claire’s faces tough competition from online giants like Amazon (AMZN), the mall jewelry and accessory retailer believes its business is likely to prevail thanks to its popular ear-piercing program.

Bankruptcy, Claire’s, Toys R Us, iHeartMedia, The Weinstein Co., Winn-Dixie, Bon-Ton Stores
Courtesy: Wikimedia Commons

Toys R Us

Earlier this month, the popular toy store chain announced that it was closing down all its stores and liquidating its operations in the U.S. after failing to restructure its business. The company informed its employees that stores and warehouses in many states will shut down by May 14 and clearance sales will start as early as March 22.

Toys R Us is looking for a buyer for its Canadian division as well as 200 of its U.S. stores. The latest buzz is that Amazon might be interested in buying some of these locations in order to increase its physical store presence for its own brand expansion. However, there is no guarantee of such a deal happening.

iHeartMedia

This radio station giant filed for bankruptcy protection after struggling with sluggish sales and a heavy debt load. The company still hopes it can emerge successfully after tackling its debt through its new agreement.

The Weinstein Co.

Following the notorious scandal against its chairman Harvey Weinstein, film and TV studio The Weinstein Co. was plagued with many difficulties. The company has finally filed for bankruptcy protection and entered into an agreement with an affiliate of the private equity firm Lantern Capital Partners to sell its assets.

Winn-Dixie

Southeastern Grocers, the parent of Winn-Dixie stores, announced that it is getting ready to file for Chapter 11 bankruptcy and will close several of its locations. The company expects the restructuring will help reduce its debt.

Bon-Ton Stores

This department store operator filed for bankruptcy last month after its debt restructuring efforts failed. Weak sales along with a lack of focus on e-commerce in the Amazon era led to Bon-Ton’s downfall. The company is facing widespread store closures in order to stay afloat.

Other companies which are facing the threat of bankruptcy include Gibson Brands, Sears and Stein Mart Inc. Some experts have opined that in today’s retail environment where there is heavy competition from Amazon and other online sellers and a surplus of shopping centers and stores, it is difficult for businesses to survive.

Other companies which are facing the threat of bankruptcy include Gibson Brands, Sears and Stein Mart Inc.

Most of these businesses took on massive amounts of debt in order to revamp themselves and survive but ended up facing losses due to weak sales and lower margins. It is a hard road ahead and one will have to wait and see how many more businesses will end up falling prey to bankruptcy as the year unfolds.

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