Financial & Bankruptcy Outlook: Retail

Why you should read this report

2023 has been a tough year for American retailers. Amid rising inflation, a cost-of-living crisis and a significant decline in consumer spending, many retailers are calling for flat to declining sales this year. While it has been three years since the COVID-19 pandemic first broke out, the effects of the pandemic severely impacted sales and revenue. In this report, we look at major U.S. retailers to see which ones are performing well financially, which ones may be showing signs of financial distress and which ones have filed for bankruptcy in recent years. Our goal is to offer useful insights into what retailers can do to improve their financial health and avoid filing for bankruptcy.

Key highlights from the report:

The Kroger Co. is in strong financial shape with increased sales and profitability, a positive debt-to-equity ratio and a track record of paying its bills on time.

The company pays 88% to 92% of its bills on time. This means very few of its bills are paid late. Plus, the value of its late payments dropped significantly in October 2023. For instance, late payments (1-30 days) dropped by 55.68%, late payments (31-60 days) dropped by 36.00%, late payments (61-90 days) dropped by 53.74% and delinquent payments (91+ days) dropped by 4.43%.

Macy’s and JCPenney may be in the same category of department stores, but their financial health differs vastly.

On the one hand, Macy’s has improved its cash flow through disciplined sales and inventory forecasting, which has helped it keep its DBT (the number of days it typically takes to pay bills past payment terms) low for the last 12 months and drastically reduce its delinquent bills. Meanwhile, JCPenney, which filed for bankruptcy in May 2020, is past due on almost half (49%) of its outstanding bills, while the number of delinquent payments and value of those payments increased consistently over four months.

Neiman Marcus is struggling with declining revenue and late payments, while Nordstrom’s revenue is up and bill payments are mostly up to date.

Three years since filing for bankruptcy, Neiman Marcus’ quarterly revenue and EBITDA has dropped. Plus, only 57.05% of the retailer’s bills were paid on time in October 2023, while 39.22% of the bills in that month were late (1-30 days). However, Nordstrom seems to be in better financial shape, as its DBT has consistently been below the industry average and its ability to pay bills on time has markedly improved.

Find out which retailers are in strong financial shape and which are showing signs of distress

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