Since last year, several retail businesses have started to close permanently or shut down some of their branches due to economic issues they could not recover from. This 2025 may not be the exception, as some stores are considering filing for bankruptcy.
In 2024, some of the stores that filed for Chapter 11 under the U.S. Bankruptcy Code included Big Lots, Tupperware, Express, and The Container Store. Here, we outline which stores could join this list.
Why are stores in the United States filing for bankruptcy?
Several experts have pointed out that consumers are facing economic challenges due to inflation, leading to a reduction in discretionary spending and a focus on purchasing only essential products. This trend could increase the risk of financial defaults, jeopardizing the economic stability of many companies.
Additionally, the potential tariffs planned by elected President Donald Trump could significantly impact businesses. These measures are likely to raise costs, exacerbating inflation and further affecting consumers’ purchasing power.
This issue will be especially critical for retailers that rely on imported products, increasing the risk of bankruptcy for some stores.
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Which U.S. stores could file for bankruptcy in 2025?
Some of the retail chains that could face bankruptcy this year include the following:
- Beyond: Born after Overstock’s acquisition of Bed Bath & Beyond following its bankruptcy in 2023, this company has experienced serious difficulties. It is estimated that there is a 4% to 10% chance that it will file for bankruptcy in the next 12 months.
- Everlane: In the early months of 2023, the company laid off about 9% of its staff as part of a restructuring aimed at adjusting its operations. One of its main challenges lies in meeting the profitability expectations set by its venture capital investors.
- Designer Brands: The brand has seen continued revenue declines, with drops of 2.6% and 1.2% in the last two reported quarters.
- Glossier: This well-known beauty brand faced significant setbacks during the pandemic, closing its two permanent physical stores before attempting a return to physical retail in 2021.
- Backcountry: Specializing in outdoor activity products, it was acquired by CSC Generation Enterprise in September. The company plans to operate under its own brand but faces challenges in the competitive sector.
- Madison Reed: The hair dye brand aspired to open or franchise 600 salons by 2024, but currently, its website shows just 100 active salons.
- Family Dollar: It has struggled as its main customer base has reduced their purchases or shifted to competitors like Walmart.
- CVS, Walgreens, and Rite Aid: These chains aggressively expanded their operations to eliminate competition but failed to anticipate the impact of lower reimbursement rates for prescription drugs and competition from Amazon, Walmart, and other market players. This year, all three have announced additional store closures.
- Advance Auto Parts: It has closed 523 corporate stores, 204 independent branches, and four distribution centers.
- 7-Eleven: Plans to close 444 stores and is evaluating renovations for others to remain competitive with more innovative formats.
- Walgreens: It plans to shut down 2,150 branches by 2027 as part of its optimization strategy.
- Foot Locker: The chain plans to close over 400 stores by 2026 while redesigning 280 locations with new concepts to attract consumers.
Which U.S. stores have filed for bankruptcy?
- The Container Store: After failing to reach an agreement with its creditors, the company filed for bankruptcy last December.
- Big Lots: The company filed for bankruptcy in September, leading to the closure of hundreds of stores. However, it reached a last-minute agreement that will keep its remaining 900 stores open.
- 99 Cents Only: The company permanently closed its operations, resulting in the permanent closure of its 371 stores.
- Macy’s: As part of a larger plan to close 150 branches, the chain has accelerated the closure of an additional 65 stores, with a deadline in January 2025.
- Party City: The chain will permanently close all its stores by February 28, 2025, marking the end of its operations.
What is Chapter 11 of the U.S. Bankruptcy Code?
Chapter 11, commonly referred to as “the reorganization chapter”, allows companies, partnerships, or individuals to restructure their assets and liabilities in an appropriate manner without having to sell off all their assets.
