It was as inevitable as the sun rising, but RadioShack finally filed for Chapter 11 bankruptcy protection on February 5.
The electronics and gadgets retailer has been struggling for more than a few years now, and there’s a stalking horse plan in place for General Wireless to acquire up to 2,400 of the nearly 4,000 Radio Shack stores – and put a Sprint store-within-a-store concept in as many as 1,750 of those RadioShack locations.
But RadioShack is not the only retailer that has filed for Chapter 11 in 2015. We are entering the sixth full week of 2015, and four retailers – RadioShack, Caché, Xhibit (SkyMall) and The Wet Seal – have already filed.
There was also a Chapter 11 filing by Delia’s on Dec. 7, which makes it five retailers since the traditional kickoff of the 2014 holiday season. That’s as many retailers that filed for Chapter 11 in 2012 and 2013 combined, per a timeline compiled by BankruptcyData.com.
You can look at a variety of things with these recent filings: Oversaturation of the market, failure to innovate, the failure to embrace ecommerce (or jumping on-board with ecommerce too late). And of course, you can blame Amazon (because who doesn’t?).
And, of course, brick and mortar is at a crossroads with omnichannel. How many times have we looked at a merchant’s quarterly filings and seen a phrase similar to “sales were down X percent… ecommerce was the lone bright spot, with double-digit growth?”
But it definitely appears the retail heard is thinning, and who knows what other struggling retailers will look to restructure like RadioShack, or liquidate like Delia’s.
Here’s a look at the most-recent Chapter 11 storylines:
RadioShack
Last February, RadioShack’s first Super Bowl commercial aired. The gnarly message was that RadioShack was no longer stuck in the 80s. A month later, RadioShack announced it would close 1,100 stores. But after it made that announcement, RadioShack shareholders disapproved of the plan. And suddenly, RadioShack’s fate seemed to be sealed.
Caché
One day before RadioShack filed for Chapter 11, Caché did the same thing. The omnichannel high-end women’s apparel and accessories is actually coming off a very good holiday season. Caché chairman and CEO Jay Margolis points out that comp store sales were up 9% vs. holiday 2014, and that the positive momentum continued through January. In a press release to announce the Chapter 11 filing, Caché also noted that its recently re-launched ecommerce site has produced double the conversion rates of its old one.
Xhibit (SkyMall)
Losing the ability to buy a glow in the dark toilet seat from 30,000 feet makes me not want to live on this planet anymore (but I guess SkyMall really hasn’t gone away, despite parent company Xhibit Corp.’s Jan. 22 filing). SkyMall suspended its retail catalog business operations on Jan. 16, and laid-off 47 of its employees, the majority of whom were employed in SkyMall’s call center. Historically, the SkyMall catalog was the sole in-flight option for potential purchasers of products to review while traveling. With the increased use of electronic devices on planes, Xhibit said in an 8-K filing with the Securities and Exchange Commission that fewer people browsed the SkyMall in-flight catalog.
The Wet Seal
Got time on your hands? Then check out the 2,698 page creditor matrix that’s a part of women’s apparel and accessories retailer The Wet Seal’s Chapter 11 filing. The Wet Seal announced on Jan. 7 that it would close 338 stores, and leave open 173 stores and its ecommerce business. Nine days later, The Wet Seal filed for Chapter 11. According to its voluntary petition, The Wet Seal has estimated assets of $10 million to $50 million (and about $31 million cash on hand) and estimated liabilities of $100 million to $500 million. Oh, and in May The Wet Seal shed its Arden B. brand.
Delia’s
Delia’s was in the same predicament as The Wet Seal – estimated assets of $10 million to $50 million and estimated liabilities of $100 million to $500 million. However, the apparel and accessories retailer for teen and tween girls decided to liquidate, and entered into an agency agreement with Hilco Merchant Resources and Gordon Brothers Retail Partners to shut its stores down. Delia’s was on ahead of the marketing world 10 years ago, when it was still owned by Alloy Media + Marketing, and Delia’s taped its teen and tween database to market to potential customers. But Delia’s fell behind the times after Alloy spun it off in 2005. Case in point: Delia’s joined Twitter in 2012.