This Legendary Chain Is on the Verge of Bankruptcy
After 100 years in business, this company's existing funds will run out as early as next month.
One of America's most famous movie theater chains is edging closer to bankruptcy. According to a report by Bloomberg, AMC, the largest movie theater in the U.S., is looking at its existing funds running out as early as next month, at which point they'd have no choice but to file for bankruptcy. Read on to find out what's ahead for the cinema giant, and for more on the current state of the economy, check out This Beloved Restaurant Chain Just Filed for Bankruptcy.
In an attempt to raise the $750 million it needs to stay affloat, AMC is looking at selling more shares, generating financing from European investors, negotiating rent breaks on its theaters, and striking deals with current debt holders. But AMC's shares fell another 19 percent on Monday, Dec. 14 when news broke that a set of senior creditors were pushing the chain to file for bankruptcy, according to The Motley Fool.
While AMC's options appear to be running out, the writing on the wall has been there since the spring, when it became clear that studios didn't need theaters to survive. NBCUniversal CEO Jeff Shell told The Wall Street Journal in April that, due to the success of Trolls World Tour on paid On Demand services, Universal planned to release movies on both PVOD and in theaters going forward. As a result, AMC CEO Adam Aron threatened to pull all Universal Studios films in the future. To Aron, it seemed to spell the end for AMC and of movie theaters as we've known them.
The entire movie industry has been hit by a perfect storm of events this year, with revenue decimated by government-mandated shutdowns, consumer reluctance to visit the theaters that are open, and a lack of new big-ticket movies as studios have delayed the releases of the major films that would normally boost footfall. As a result, Bloomberg reports that attendance at AMC's locations across the country fell by 92 percent in the fourth quarter of 2020 compared to the same period in 2019.
The prognosis for 2021 looks grim for movie theaters generally. While a vaccine is now starting to be rolled out, it will take much of the new year for enough people to be inoculated to make a return to normal life, including going to the movies. Meanwhile, on the studio side, Warner Bros. announced last week that all 17 of its biggest scheduled movies for 2021 would be released simultaneously on the HBO Max streaming service as well as in theaters.
Of course, AMC, which has been around since 1920, is hardly the only company suffering right now. Read on for more examples of celebrated American chains that have been hit hard by this chaotic year, and for another shocker, check out This Iconic Clothing Chain Is Closing Its Biggest Stores.
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Clothing and accessories chain Francesca's was a mainstay of the shopping experience for tweens and young adults, but the trouble started to show in November. On Nov. 16, the company announced that 140 of its 700 stores would close by the end of Jan. 2021. Then, the chain filed for Chapter 11 bankruptcy protection on Dec. 3 and announced an additional 97 locations would shutter. And for another chain that's in trouble, check out This Iconic Clothing Brand Is Starting to Close Over 200 Stores.
Guitar Center has been a permanent fixture in the music world for more than three decades, most famously for its 30,000-square-foot store on Sunset Boulevard in Hollywood. The chain underwent a major overhaul in 2018, but it wasn't enough to secure its footing and in mid-November, Guitar Center announced that they were entering a restructuring deal to cut debt by $800 million. The company stressed that this deal will allow business operations to continue without any interruption to its 300 stores nationwide. And for more up-to-the-minute retail news, sign up for our daily newsletter.
After a decade-long downward spiral, GameStop announced in early December that it will close more than 1,000 stores by the end of its fiscal year in March. The largest video game retailer in the world already closed over 783 stores over the previous two years.
But CEO George Sherman is still optimistic, according to Games Industry. "We anticipate, for the first time in many quarters, that the fourth quarter will include positive year-on-year sales growth and profitability, reflecting the introduction of new gaming consoles, our elevated omni-channel capabilities and continued benefits from our cost and efficiency initiatives, even with the potential further negative impacts on our operations due to the global COVID-19 pandemic," he said during a Dec. 8 call with investors. And for more video game news, know that If You Bought This Year's Most Popular Gift, You Need to Get a Refund.
Another nearly 100-year-old brand recently announced major closures: Naturalizer, which dates back to 1927. The store's parent company, Caleres Inc., revealed in late November that it was closing 133 Naturalizer stores in the U.S. and Canada. By the end of the fiscal year, only two will remain in the U.S.: one in Miami's Dadeland Mall and New York City's 34th Street location.
During Caleres' third-quarter earnings call, the company's SVP and CFO Kenneth Hannah said the coronavirus pandemic has been "putting pressure and putting a number of [Naturalizer] stores into a loss position," according to Retail Dive. "We went from stores that were generating [a] decent amount of revenue and obviously that reduction [in foot traffic] has put a lot of pressure on the bottom line. … Now is just a good time to go ahead and exit." Footwear News reports that Caleres said they plan to grow Naturalizer's e-commerce business through both its own website and the websites of other Caleres brands, including Famous Footwear. And for another closure that has many shoppers disappointed, check out This Mall Favorite Just Filed for Bankruptcy.