The wave of bankruptcies sweeping through retail, and most recently washing out Payless Shoesource, is expected to keep rolling over the next year.While the default rate of Fitch Ratings’ U.S. retail portfolio had dropped to zero last month, the Chapter 11 bankruptcy filing of Payless, under a debt load of about $665 million, bumped that number up to 1 percent. And the ratings agency said the default rate is likely to hit 9 percent over the next 12 months.Fitch's concerns stem from increasing market penetration by discount retailers, including those in the off-price and fast-fashion realms, along with more general “shifts in consumer spending toward services and experiences.”“All of these factors have created a highly competitive retail environment and accelerated mall traffic declines,” Fitch said. “Retailers have also suffered from the ebb and flow of brand popularity. Negative comparable-store sales and fixed-cost deleverage have led to negative cash flow, tight liquidity and unsustainable capital structures.”The debt watchdog previously had Payless on its “concern list,” given its highly leveraged debt situation coupled with declining sales. Fitch also pointed to a number of other retailers it sees at “significant risk of default” within a year that collectively hold about $6 billion in debt.Included on the risk list are Sears Holdings Corp. with roughly $2.5 billion in debt, along with Charming Charlie LLC, Nine West Holdings Inc., Rue21 Inc. and True Religion Apparel Inc., all of which are private companies that do not publicly disclose their debt.Fitch isn’t the only rating agency with a dim view of retail’s financial future. At the end of February, Moody’s Investors Service said the number of retail debt issuers with a distressed rating was nearing 14 percent of its portfolio, the highest rate since the Great Recession.Of those retailers Moody’s considers distressed, the agency said companies with weak liquidity are the “most vulnerable” to a debt default.Retailers Moody’s put in the category of distressed with weak liquidity included Rue21, True Religion and Charming Charlie.Moody’s also highlighted accessories retailer Claire’s as a distressed retailer at risk of default, and with $26 million in senior subordinated notes coming due on June 1, it could be the next to make a restructuring move. In January, the company pulled plans for an initial public offering.As for Rue21, its next debt maturity comes in October 2018, but Moody’s cited the “discretionary nature” of Rue21’s product and the economic pressures facing its “lower-income target customer,” namely teenagers, along with its lack of differentiation among a “highly competitive and fragmented ‘fast-fashion’ industry,” as cause for default concern.Should any of these retailer’s move to restructure their debt in court or decide to close stores, they’ll find themselves with a lot of company.Companies such as Bebe, Macy’s, Abercrombie & Fitch and even Ralph Lauren Corp. collectively plan to shutter hundreds of stores, while The Limited, The Wet Seal and BCBG Max Azria have opted for bankruptcy.For More Retail Coverage, See:Mergers Could Be the New Trend in LuxuryAnalysts Have Faith in Lululemon, but Wary of Slowing GrowthRalph Cuts Deep: Closes Fifth Avenue Polo FlagshipJosh Schulman Leaving Bergdorf GoodmanHow Much Faster Can Fashion Get?
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion
@longchamp, which marks its 70th anniversary this year, just opened its biggest U.S. store on Manhattan’s Fifth Avenue. On the lower level there’s a floor-to-ceiling display of the brand’s iconic Le Pliage bag – in all of its different colors, shapes and sizes. Customers can also have their product personalized in-store by imprinting names, initials or emblems. #wwdfashion (📷: @ericmtownsend)
“Whenever I’m in that place of sound and music, I don’t have fear or nervousness…This album has a lot of themes of courage and boldness and I want to be the soundtrack for people’s lives. I’ll be so happy if [my songs] evoke strength in people, which I know music has done for me,” says @kimbramusic of her newest album “Primal Heart.” The New Zealand-born singer sat down with WWD to talk about her music, newest tour and connecting with hear fans — read more on WWD.com #wwdeye (📷: @jilliansollazzo)
Luxury handbag resale company @rebagofficial is planning to sell a rare collectible for $70,000: the @hermes White Crocodile Himalayan Birkin. The exclusive Birkin sold for about $100,000 in 2008, when @davidbeckham bought one for his wife @victoriabeckham to add to her collection. Read more about the rare Birkin on WWD.com #wwdaccessories
With her costume pearl necklace and what-you-see-is-what-you-get style, Barbara Bush, who died Tuesday at age 92, was a straight-shooter from start to finish.
Born Barbara Pierce in New York City, Bush served as the 37th first lady, as well as the country’s second lady from 1981 to 1989. In addition to being part of the longest presidential marriage — 73 years — Bush also had the unlikely distinction of having one son, George W., become the 43rd president and another son, Jeb, run unsuccessfully in 2016. Having served as second lady during the Reagan administration’s two terms and lived all over the world during her own husband’s ascending political career, Barbara Bush made it clear that literacy — not fashion — was her priority. Read more from Rosemary Feitelberg’s obituary on the late First Lady in WWD.com, link in bio. #barbarabush #wwdnews
Western and ’90s trends have influenced denim for fall 2018. Think raw, dark and coated jeans mixed with bold prints and tough leather. #trendtuesdays #wwdfashion (Styled by @thealexbadia;📷: @ryanplett)