Lord & Taylor is among a string of retailers to file for bankruptcy protection this year

Lord & Taylor is among a string of retailers to file for bankruptcy protection this year

US retail bankruptcy filings and liquidations reached a record in the first half of 2020 as a result of the coronavirus pandemic – positioning the year to see more bankruptcies filed than during the great recession of 2010.

A report from professional services firm BDO USA says through to mid-August, 29 retailers filed for bankruptcy protection, surpassing the 22 filings recorded for the whole of last year.

Apparel retailers that filed for bankruptcy include Stein Mart, Tailored Brands, Ascena Retail Group, Le Tote/Lord & Taylor, Muji, Brooks Brothers, RTW Retailwinds, Lucky Brand, Neiman Marcus, JC Penney, John Varvatos, J.Crew and True Religion.

Temporary government-mandated store closures and social-distancing measures have intensified challenges faced by bricks-and-mortar retailers before the pandemic, according to BDO. Consumers stuck at home are buying more online than ever, with rising internet sales expected to partially offset losses from physical stores, the report said.

BDO warns that with 29 filings in 2020 to date, this year is on-pace to rival 2010, following the great recession, which resulted in 48 total filings.

This year has also seen a substantial rise in the number of store closures, with bankrupt retailers alone shuttering almost 6,000 stores. From January through mid-August, there have been more store closure announcements in 2020 than the record 9,500 stores that closed throughout 2019. The majority of store closures have taken place in malls, which have seen far less foot traffic due to sustained Covid-19 disruption.

"In short, 2020 is on track to set the record for the highest number of retail bankruptcies and store closings in a single year," says BDO.

"Based on the trends set through mid-August, our expectation is that more retailers will struggle to navigate the effects of the pandemic –particularly those that are highly levered and mall-based. However, the number of filings in the fourth quarter may be tempered by retailers holding off on filing for bankruptcy in hopes of a profitable holiday season.

"While there's no precedent to predict how the end of 2020 will shake out, we expect that retailers that remain agile, leverage data to understand their customers and plan carefully will be better prepared to weather this year and beyond."