The Coronavirus Retail Casualties Are Already Piling Up: Pier 1, Modell’s, Kaufhof

If will be the loss of human life that will unquestionably be the biggest tragedy of the coronavirus pandemic.

But the loss of business life will also be devastating. While any number of companies, particularly in the field of retailing, are unlikely to survive this crisis we’re already seeing the first wave of casualties here in the U.S. and around the world.

And if we don’t know how many there will be whenever the coronavirus pandemic starts to lessen we do know which businesses have already succumbed – or are on life support – because of the massive economic and social disruption caused by this crisis. From bankruptcies to cancelled liquidation sales to deals becoming undone, the toll is mounting up.

        • The biggest coronavirus-related bankruptcy has come in Germany where the country’s leading department store chain, Kaufhof, has filed the equivalency of chapter 11, citing the pandemic. Kaufhof has had a rough time recently, first being taken in by Richard Baker’s Hudson’s Bay Co. in a joint venture that seemingly played to Baker’s concept of a global retailing conglomerate. When the bill came due for the purchase Baker bailed out, leaving Kaufhof in the hands of others. Those hands apparently weren’t big enough to keep the retailer out of trouble.

        • Nothing has been confirmed but it appears increasingly likely that another big department store company, Neiman Marcus, may face the same fate. Rumors have been rampant that the company is getting ready to file chapter 11 but Neiman’s isn’t talking. While it’s possible that it will find the financing somewhere to let it live another retail day, the company was on pretty tenuous footing before all of this started.

        • Another casualty has been liquidation sales at physical retail locations. Modell’s, the Northeast sporting goods chain that filed for bankruptcy and was in process to liquidate, has had to put that on hold because of all the store closings. Turns out liquidating stock isn’t very easy online. Same thing for Pier 1 which had announced it was shutting down half its 900 or so locations and conducting close-out sales at those locations. They too are closed, the fate of their inventory held in abeyance waiting for things to calm down.

        • Pier 1 has had a double whammy. What was left of the company was in the process of being sold off to a suitor or suitors unknown but that’s on hold too pending the end of the crisis. No specific buyer had ever been identified prior to all of this and some are speculating that given the sad state of retailing now it’s unlikely anybody will want the Pier 1 remnants at any price. It could be a full-out liquidation before things are over.

        • Another casualty has been a deal that was in the making. Earlier this year Bed Bath & Beyond sold its PersonalizationMall.com unit to 1-800-Flowers but now the buyer wants more time to close the deal, citing the coronavirus situation. BBB, not surprisingly, wants the deal done as it no doubt was counting on the $190 million in proceeds to help it get through this period. The whole thing seems to be in the hands of the courts now, which sometimes never turns out well for anybody.

The longer this crisis goes on the more casualties on the retail front there are likely to be. Sadly, it’s doubtful we’ve seen the worst of it yet.