COVID Killing Businesses: Men’s Wearhouse Goes Bankrupt
The economic impact of the Coronavirus has been staggering, with numerous small businesses being forced to close their doors permanently and once seeming invincible corporations declaring bankruptcy.
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The dress clothes industry has been on the ropes for awhile, but with COVID locking everyone in their homes there’s less reason to buy a suit than ever. So, predictably, the affordable men’s dress clothes chain Men’s Wearhouse, is going under.
Tailored Brands owns Men’s Wearhouse and JoS. A. Bank with more than 1400 stores and 18,000 employees nationwide. On August 2, 2020 they filed for Bankruptcy protection. They cite plummeting demand as office workers who normally buy their products are now working from home in their pajamas.
That doesn’t mean all their stores will shut down right away. Their current plan is close 500 stores and eliminate 20% of their workforce on the corporate side. That restructuring is expected to save the company around $630 million dollars. That’s a stopgap, for now.
The truth though, is that we may never go back to a way of life in which people need low-cost suits to wear to work. Telecommuting is here to stay and even before the pandemic Men’s Wearhouse was struggling to stay afloat. The future for what’s left of the company does not look bright.
Pizza Hut And Wendy’s Franchises In Trouble
The economic impact of the Coronavirus has been staggering, with numerous small businesses being forced to close their doors permanently and once seeming invincible corporations declaring bankruptcy.
The latest to fall prey to COVID’s fallout is NPC International. You may not know their name, but you’ve probably eaten their food. They own more than 1200 Wendy’s and Pizza Hut franchise locations across the United States and they’ve just declared bankruptcy according to CNN.
The company officially filed for Chapter 11 protections on July 1, 2020. They cite Coronavirus related shutdowns, rising labor costs and rising food costs as the cause of their problems. Those have apparently resulted in a debt of nearly $1 billion that they are now unable to pay. The company employs nearly 40,000 people in 27 different states.
Often a bankruptcy results in a company shutting down at least some of its operations. So far though, NPC has no plans to shut down any of its restaurants. That may change as things develop, however.
To put in context just what percentage of total Pizza Hut and Wendy’s restaurants NPC owns, Pizza Hut reportedly has 7100 locations in the US and Wendy’s has around 6500. Of the 1200 Pizza Huts and Wendy’s owned by NPC, most of them are Pizza Huts. So should the company ultimately fold, it could have a significant impact on your ability to get breadsticks (it’s all about the dipping sauce), but unless you’re just extraordinarily unlucky you should still have full access to buy Big Bacon Classics.
AMC Theaters Doubts They Will Survive
Though AMC theaters currently has plans to reopen, they may be done. The nation’s largest chain announced on June 3, 2020 that they doubt they’ll be able to survive the shutdown imposed on them by the COVID-19 outbreak.
Here’s the full statement from AMC: “If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”
If and when AMC folds, expect to see Hollywood give up on movie theaters entirely. AMC represent a huge chunk of their overall distribution. Without AMC they’ll have no way to get movies to large portions of the country. Their only choice, at that point, will be to #JustStreamIt.
It was on Friday April 3, 2020 that S&P Global downgraded its credit rating for AMC Entertainment from a B to a CCC-. That drop took the company’s outlook from “highly speculative” to the almost certainly doomed rating of “Default imminent”.
Often when these kinds of ratings are issued, they’re issued on a Friday and by Monday, default is no longer imminent but actually happening. Corporate default means that AMC has failed to pay its debts. Basically they aren’t going to be able to pay their bills or their loans. That’s the first step in a company going totally under and with forecasts estimating that movie theaters won’t re-open any earlier than June, there isn’t a lot of hope for AMC here.
CMX Theaters Becomes The First Chain To File For Bankruptcy
AMC theaters has been on the verge of bankruptcy for a couple of weeks, but as the nation’s largest theater chain they have a lot of options. Smaller chains have fewer, so it was inevitable that one of those would be the first theater chain to file bankruptcy. So CMX Theaters is now the first chain to file for bankruptcy.
CMX Theaters is a popular Florida-based theater chain and after weeks without the ability to show movies and an uncertain future where no one knows when or if audiences will come back, they’ve reached the end of their rope.
Here’s the statement CMX included with their bankruptcy filing on April 30, 2020 according to the trades.
“We are in a state of complete uncertainty as to when we can re-open our theaters and when our customers will feel safe and secure in returning to them given that there is presently no vaccine against the virus.“
CMX operated more than a dozen theaters with locations in Florida, Georgia, New York, Minnesota, and Illinois.
Coronavirus Shutdowns Changing Shopping Habits
As the citizens of the world are forced to stay home, they’re also being forced to work via telecommuting. And telecommuting means that almost all of your interactions with your workmates are either through email or video chat. And you don’t need pants to video chat.
Or at least that seems to be the conclusion reached by most shoppers. The latest online clothes buying habits seem to indicate that when working from home, many employees are Porky Pigging it.
Dan Bartlett, executive vice president of Walmart’s Corporate Affairs tells Yahoo Finance that they’ve seen a big spike in consumers buying shirts online, while at the same time no one is actually buying bottoms.
So the next time you’re talking to Bob about the big project you’re working on, ask him to stand up and see what happens. Or maybe, depending on how you think Bob might look in his tighty-whiteys, you might be better off not asking at all.
