What’s S&P Global Market Intelligence saying!
The New York-based publicly traded corporation has included American womenswear brand J. Jill in its list of most vulnerable retailers.
And not just J. Jill, Destination XL, specialty retailer for big and tall men’s apparels, too has been named vulnerable.
While J. Jill has a default probability of 16.8 per cent over the next 1 year, Destination XI has a default probability of 15.4 per cent.
The retail sector has been struggling in 2020 owing to pandemic onslaught and fashion and apparel industry, in particular, has been the worst hit. Every second week, there’s news of some fashion retailer going bankrupt or on the brink of insolvency.
S&P Global report says, 2020 has already witnessed 44 bankruptcies, which is just 1 short of 2011 figure of 45 and 3 short of 2010 (48).
With 4 full months to go for 2020 to end, it wouldn’t be a surprise if 2020 turns out to be the worst in last 10 years as far as retail insolvency is concerned.
J. Jill has been on the verge of insolvency after it went into forbearance with its lenders following which has extended it many times. In May 2020, the company then hired restructuring advisers Kirkland & Ellis LLP to help fix its balance sheet.
The investors were warned that the retailer would not be able to survive more than a year.
Destination XL too had poor Q1 with a sales fall of 49.3 per cent and with Q2 reports expected to come out anytime next week, there may not be much improvement in numbers.
Notably, in the first half of March, as per CreditRiskMonitor’s FRISK score, Destination XL Group was one of the retailers downgraded to FRISK scores of 1 or 2 and vulnerable to bankruptcy.
And now with S&P Global’s list too containing the names of aforementioned fashion retailers, tough times seem to continue for the industry.
S&P Global Inc., which is the parent company of many including S&P Global Ratings and CRISIL, has financial information and analytics as its main areas of business.
