by Peter Schiff, Schiff Gold:
Less than two months after reopening, Regal Theaters will shut down all 536 of its locations on Thursday (Oct. 8).
The company said the closures reflect “an increasingly challenging theatrical landscape” due to the coronavirus pandemic. Regal says the closures are temporary, but the company has not set a date to reopen.
The shutdown reflects broader problems in the retail marketplace that have been exacerbated by COVID-19 and stabs another knife in the narrative of a quick economic recovery.
The Regal shutdown will result in layoffs for 40,000 employees.
Regal is a subsidiary of UK-based Cineworld Group and ranks as the second-largest theater chain in the US after AMC.
Hollywood has exacerbated the problems for movie theaters. Studios have delayed dozens of big releases over the past six months.
The prolonged closures have had a detrimental impact on the release slate for the rest of the year, and, in turn, our ability to supply our customers with the lineup of blockbusters they’ve come to expect from us,” Cineworld CEO Mooky Greidinger said in a statement. “As such, it is simply impossible to continue operations in our primary markets.”
The retail sector – particularly brick and mortar companies – was struggling before the coronavirus pandemic. The government shutdowns in response to COVID-19 has sent it into a freefall.
Retail companies are going bankrupt at a record pace. Financial advisor BDO released an overview of US retail bankruptcies and store closures through the first half of 2020. It concludes that the pandemic has exacerbated the problems already plaguing the sector.
Government-mandated store closures, social distancing measures, supply chain issues and upticks in e-commerce sales have only intensified existing pain points felt by brick-and-mortar retailers, accelerating the pace of bankruptcies going into the second half of the year.”
Through the first six months of 2020, 18 retailers filed for Chapter 11 bankruptcy, with an additional 11 filing in July through mid-August. The pace of bankruptcies rivals 2010 in the wake of the Great Recession.
2020 is on track to set the record for the highest number of retail bankruptcies and store closings in a single year. Based on the trends set through mid-August, our expectation is that more retailers will struggle to navigate the effects of the pandemic—particularly those that are highly levered and mall-based.”
The bankruptcies have been concentrated in apparel and footwear, home furnishings, food, and department stores. Here are some of the prominent companies that have filed for bankruptcy so far this year.
- Pier 1
- J. Crew
- Neiman Marcus
- Stage Stores
- J.C. Penney
- Tuesday Morning
- Lucky Brand
- RTW Retailwinds (New York & Co.)
- Brooks Brothers
- Ascena (Ann Taylor, LOFT, Lane Bryant, Justice, Catherines)
- Le Tote (Lord & Taylor)
- Tailored Brands (Men’s Wearhouse, Jos. A. Bank, Moores Clothing, K&G)
- Stein Mart
In addition to the bankruptcies, more than a dozen retailers including Macy’s, Bed Bath & Beyond and Gap have announced they will shutter 50 or more stores, totaling a combined 4,200-plus stores.
One could argue that the retail apocalypse isn’t solely a function of the coronavirus. The sector was in trouble before the pandemic due to heavy debt loads, changing consumer habits and a shift to online shopping. Nevertheless, the government shutdowns have sped up the process.