Popular stores going out of business
BRIANNA HARRINGTON
BUSINESS EDITOR
@BNH1995
Avid shoppers at RadioShack, Wet Seal, and JCPenney should be prepared to find new favorite stores to shop at. Many companies have been hit by severe financial crises and will be shutting down many of their stores, or even closing their company completely.
RadioShack is probably one of the most noticeably hit companies regarding this financial crisis.
The company filed for Chapter 11 bankruptcy, which relieves the debtor of total financial responsibility for its debts and has no limits on the amount of debt, after selling 2,400 stores to Sprint.
However, this move did not come out of nowhere.
RadioShack has not turned a profit since 2011 and has posted losses for the past 11 quarters.
The company attempted to revive its brand by hiring a new company manager in 2013, but their financial decline continued.
RadioShack refinanced its debt with Standard General twice to avoid running out of money, and that too was a failed attempt at avoiding bankruptcy.
RadioShack is now $1.4 billion in debt and the New York Stock Exchange (NYSE) is attempting to suspend trade in the stock.
The NYSE is also working on delisting the company because its market value is too low.
Sophomore Casety Orr is not suprised by RadioShack’s announcement.
“They have been facing bankrupty for years.” Orr said. “It doesn’t suprise me that they are failing because everything is moving to the Internet. If people don’t have to leave their homes they would rather shop on Amazon. Also, it has to do with branding. It’s pretty well known that if you want quality electronics you go to Best Buy.”
Wet Seal is joining RadioShack in bankruptcy, and also filed for Chapter 11 bankruptcy. Wet Seal announced that it would be closing the doors of more than half of its stores.
The company has lost more than $150 million over the last two years and defaulted on $27 million in senior convertible notes, which is a debt security with the option for the note to be converted into a predefined amount of the issuer’s shares, in December.
Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors offered some insight as to why the store failed.
“Wet Seal failed for two reasons: a company that failed to stay in tune with their customers and new rivals like H&M that were able to get the cooler merchandise to the stores quicker and with slightly better quality than Wet Seal.”Sozzi said.
JCPenney seems to be joining this sinking retail ship.
The company has not yet filed bankruptcy, but it certainly seems to be headed in that direction.
After a revenue crash in 2013, JCPenney has been struggling to regain its financial footing. The company posted a loss of about $1.5 billion and has not yet been able to recuperate from this hit.
The company announced that they were planning on closing about 40 stores across the nation, which will cause the loss of about 2,250 jobs.
However, it is speculated by 24/7 Wall St., a company that republishes articles from many of the largest news sites and portals, that closing 40 stores will not be nearly enough to save the company. The company would need to close at least 200 stores to come back from the crippling debt they have found themselves in.