The 5 Stores Most Likely To Declare Bankruptcy In 2024

This year was a pretty rough one for retailers. Huge companies like Bed, Bath & Beyond, Tuesday Morning and Christmas Tree Shops had to declare bankruptcy and close all of their stores, while others, like Sears, Pizza Hut, CVS, Foot Locker and Walgreens have been shuttering locations as a cost-cutting measure. Unfortunately, just because a new year is beginning, it doesn't mean that companies' financial challenges will immediately end, and because of that, expect more bankruptcies in 2024. Here are five stores that experts identified as the frontrunners for bankruptcy in the new year.

JOANN Fabric and Crafts

After doing in-depth analysis into some well-known brands, financial information publisher Credit Risk Monitor concluded that national craft retailer JOANN's Fabric and Crafts is at a very high risk for bankruptcy. Credit Risk Monitor assigns scores to companies, which represent their probability of going bankrupt, and JOANN's got the publisher's worst score of 1, which means there is between a 10% and 50% chance that they will declare bankruptcy in the next 12 months. The score has had a 96% accuracy rate in predicting bankruptcies, so it is pretty credible.

Unlike many other brands, Joann's actually was very profitable during the pandemic, as people stayed inside and picked up hobbies that the store caters to. Unfortunately, that momentum hasn't lasted and sales have dropped. The company recently had to lay off employees and their chief executive officer, Wade Miquelon, retired in May and hasn't yet been replaced. While the chain was able to save some money by getting price concessions from suppliers, there's no word yet on if they also plan to implement any large-scale cost-saving measures, like shuttering some of their locations.

Big Lots

Big-box retailer Big Lots got a score of 2 from Credit Risk Monitor, which means there is between a 4% and 10% chance that they will be bankrupt in the next 12 months. Execs at the company addressed their struggles during a recent earnings call, when CEO Bruce Thorn stated, "For the past year and a half, we've been playing defense as the consumer environment quickly and sharply deteriorated. High inflation has disproportionately impacted our lower-income customers, who have delayed or pulled back spending on discretionary items, particularly in high ticket home and seasonal categories, which were already challenged by the post-COVID spend shift away from home categories."

Big Lots is working to right the ship. They've sold some of their properties and leased the locations back, giving them a $200 million boost. They're also thinking about their future, and they feel it looks promising. They'll be transforming ten stores into a new concept called Big Lots Home that focuses on furniture and decor.

Petco

Like Big Lots, Petco has a 4% to 10% of bankruptcy in the next 12 months. The company did well during the pandemic as more households got pets, but since then, sales have taken a dip. The company also has $1.7 billion in long-term debt, so most of their profits go to paying that off. This actually might help keep them out of bankruptcy though, since they are consistently chipping away at their debt. However, that means they aren't making much money so they might need to close some locations in the new year to help free up more cash. There hasn't been any update on if that's in the cards for any of their 1,500 stores.

Express

Express, the 40-year-old fast fashion retailer with over 500 locations nationwide, is rumored to be close to bankruptcy. The chain was hit hard during the pandemic, when there wasn't as much of a demand for the business casual apparel they sold. Things haven't gotten better since then either, as consumers have been more interested in comfortable athleisure wear than the clothes that Express sells, causing the company's profits to drop. They closed 91 stores to offset the losses in 2020, but have not yet been able to turn things around, and it's not looking good for them. Retail industry consultant Shawn Grain Carter told Retail Dive, "Express is truly on a respirator and teetering on possible bankruptcy."

To encourage customers to return, the store has been offering promotions like "buy one, get one 50% off." They also hired a new CEO and plan some layoffs to cut costs. However, Carter thinks it likely won't be enough, stating, "I would not be surprised if they end up in Chapter 11 bankruptcy. I think it's sad because they were once a destination for young people to purchase goods at a decent price that were on trend."

The Container Store

The Container Store is another company Credit Risk Monitor scored with a 2, the second-worst rating possible, with a 4% to 10% chance of needing to declare bankruptcy in the next year. After some success during the pandemic, as more people stayed at home and needed goods from the retailer, lately, The Container Store has seen far fewer customers. The chain did try to woo some of Bed, Bath & Beyond's customers after their bankruptcy, accepting the defunct retailer's coupons for a time, but it hasn't seemed to help.

CEO Satish Malhotra is aware of the issues and trying everything in his power to get back on track, including taking a 10% pay cut on his base salary so that the company's 5,000 employees could get their annual merit raises. No word yet on if any of The Container Store's 101 locations will be closing soon.

It's not all bad news for retailers in 2024. One brand that previously closed all their stores amid bankruptcy will be making a comeback next year. Toys R Us plans to open 24 stores nationwide in "prime cities." They'll also soon have locations in airports and on cruise ships. No word yet exactly where the new stores will be, but they'll be opening in the coming months.