This article was originally published in Retail Dive by Caroline Jansen
February 14, 2024 | LINK
11 digitally native retailers that could file for bankruptcy in 2024
While off to a slower start than 2023, filings are expected to continue in the industry, especially among many direct-to-consumer brands.
Last year saw a number of DTC players file for Chapter 11or shut down entirely.
From Forma Brands — the parent company of Morphe, Jaclyn Cosmetics and Bad Habit — to SmileDirect Club, a wave of digitally native companies found themselves in bankruptcy court. And department store Showfields, which once dubbed itself as “the most interesting store in the world” and housed several DTC brands as part of its rotating assortment, filed for bankruptcy in October last year and has since shuttered all of its stores.
While 2024 so far has seen a slower start to bankruptcies, filings will likely pick up in the industry, particularly among digitally native retailers.
“This is going to be a year of resettling for a lot of companies that have been disrupted over the last few years,” RapidRatings Executive Chairman James Gellert said. “So many companies have emerged and/or grown over the last three or four years — really boosted by the pandemic — but have faced a much harder time since the pandemic.”
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According to RapidRatings exclusive FHR dataset, former e-commerce stars, such as Rent the Runway, The RealReal, and Wayfair, are teetering on the edge of bankruptcy. Two key themes will determine whether these companies stay afloat: operational turnaround and financial resilience.
James Gellert, Executive Chair of RapidRatings, warns, "Not all companies will make it. Many are financially weak or worsening."
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