This article was originally published in Forbes by Pamela N. Danziger
May 3, 2023 | LINK
The Perfect Storm Is Brewing For More Retail Bankruptcies After Bed Bath & Beyond And David’s Bridal
Retailers face a perfect storm due to the rising cost of capital, trouble in the banking sector, slowing residential real estate market, record levels of household debt and persistent inflation that is already turning the tide on consumer demand.
In the first four months of the year, nine major retailers have filed for bankruptcy protection, quickly surpassing the total five retailers that fell in 2022, a 13-year low, following 12 filings in 2021and 35 in 2020, according to the latest BDO “Retail in the Red” report.
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In today's economic climate, doing business has become increasingly difficult for many industries, but arguably none have been hit as hard as the retail sector. With shifting consumer habits, unfavorable market conditions, and limited access to lending, even once-thriving companies like Bed Bath & Beyond are experiencing fatal blows in this unforgiving market. Chairman & CEO James Gellert has emphasized, a company's financial health is now more critical than ever, as it can determine whether or not they will weather the storm.
“Financial corporate health is a good deal like physical health,” James explained. “Healthy companies are in the best position to withstand a shock.”
Our ratings system has identified the retailers that are currently in the high-risk zone, where historically over 90% of companies have failed. These companies are now facing a critical 24-monthperiod, during which their survival will be uncertain.
RapidRatings is the only company that flags financial health deterioration, for both public and private companies. This gives you the ability to anticipate potential disruptions with your third-party partners, suppliers, and vendors well in advance, thus mitigating risks and safeguarding your business.
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