Stores are Failing in this Market

It is no surprise that times are hard for many businesses at the moment.  With the Pandemic most companies have been hit hard by the change in how our world works.  Customers have changed and their habits have been changed by force.  Even money has become a big issue because 30 million people have been put on unemployment and they simply do not have the same amount of money to spend anymore.  What they are spending it on is essential costs like rent and things that keep them alive.  The stimulus checks that went through for most people in need only helped for a few weeks or a month depending on the cost of living in their area.  What has occurred because of all of this, is businesses are starting to fail. 

The first large retailer just went into bankruptcy because of the pandemic.  J. Crew was not doing well before the lockdowns started, but now they have officially declared bankruptcy. This Mass Market clothing company was well known.  They appeared on fashion week, were in magazines and even a favorite of Machelle Obama.  Even with all of this they were unable to survive the storm. Now due to the chapter 11 filing of their parent company, they handed over control of the company to creditors. This still means that the e-commerce portion will be open while the bankruptcy and reorganization is happening. Companies that are thriving during this pandemic are market research companies  who saw the storm coming and made wise financial decisions to profit from the market crash.

But for J. Crew, their debts simply overcame them.  They have been struggling with the effects of the covid-19 pandemic which has hit many retail stores hard.  The lack of individuals being able to actually legally shop in person has changed the ability to make profits like they were. The retail industry sales in march fell by 50%.  That is 50% of retailers who most likely will not be able to pay bills.  April is slated to be an even worse month and it will be brutal on the industry. 

The Federal Stimulus Package ran out of money a few weeks ago and many companies who applied were denied due to lack of funding.  The funding for many of the companies who were accepted still has not arrived. This is putting insurance companies in the position of cutting off insurance for lack of payment.  In many industries that in and of itself and can shut a company down. As per the usual we are only talking about the market as we see it.  For financial advice see your broker, investment firm, or attorney.