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JOANN, Rite Aid, and 3 Other Major Stores Facing Bankruptcy

These retailers have the highest risk of filing in the next 12 months, new data shows.

Our favorite retailers are usually the ones we feel like we can count on to always have what we need, whether we're shopping online or paying these stores a visit. But as we now know all too well, the ongoing retail apocalypse forces even the most beloved companies to shutter locations, making reliability a thing of the past. Now, several big-name stores are potentially facing bankruptcy in the next 12 months, Retail Dive reported, citing new data from CreditRiskMonitor.

With the threat of an impending recession looming, consumers might just be spending less right now. As Elizabeth Han, senior director on Fitch's U.S. leveraged finance team, told Retail Dive, current shopping habits are typical of trying times.

"A lot of retail is consumer discretionary so in the event of an economic pullback, or economic uncertainty, you'll see some of that revenue come down because it's more of a discretionary purchase," she said.

However, she added that retailers are also struggling with ongoing inflation, inventory and supply chain issues, and high interest rates, all of which affect companies' overall stability.

To evaluate retailers with the highest risk of bankruptcy, CreditRiskMonitor labels them with a FRISK Score, which ranges from 1 (the worst) to 10 (the best). The list of those in the most trouble includes mainstays like JOANN (formerly known as Jo-Ann Fabrics), Rite Aid, and three other well-known brands. Read on to find out why these companies are struggling.

RELATED: 6 Banks, Including Wells Fargo and Bank of America, Closing Branches This Fall.


joann fabrics logo on building
The Image Party / Shutterstock

JOANN is the first on the list, with a FRISK Score of 1, meaning it has between a 9.99 and 50 percent chance of filing for bankruptcy in the next 12 months, Retail Dive reported.

JOANN has faced highs and lows since the COVID pandemic, negatively affected at first due to the temporary closure of retail stores, but also positively impacted due to an increased interest in quarantine crafting.

According to Retail Dive, JOANN filed for an Initial Public Offering (IPO) in Feb. 2021, but its sales fell later that year. It also struggled, like many others, as new COVID variants emerged and supply chain issues persisted. The craft giant made some changes this year, including employee layoffs and other cost-cutting measures, but it still maintained a long-term debt amounting to $1.1 billion as of July.

RELATED: Shoppers Are Abandoning Costco, New Data Reveals—Here's Why.

Rite Aid

rite aid store

Rite Aid is next on the list of the most vulnerable, also coming in with a FRISK Score of 1, Retail Dive reported.

The question of whether or not Rite Aid will file for bankruptcy in the near future has been a hot topic of discussion—and it's been rumored the company could close as many as 500 stores as a result.

The company has $3.3 billion in long-term debt as of June, which is made worse by the fact that sales continue to fall, according to Retail Dive. This is an unfortunate turn from the height of the COVID-19 pandemic, when Rite Aid was a destination for vaccines, masks, and medical necessities.

RELATED: Rite Aid Reportedly Closing Almost 500 Stores in Face of Bankruptcy.

Big Lots

big lots store
Eric Glenn / Shutterstock

Discount retailer Big Lots is at risk of filing for bankruptcy, too, but it's faring a bit better than Rite Aid and JOANN, according to CreditRiskMonitor's data. Big Lots has a FRISK Score of 2, meaning it has between a 4 and 9.99 percent chance of bankruptcy in the next 12 months.

Sales fell "by double digits in each of the past two quarters," Retail Dive reported. Big Lots tried to combat this with cost-cutting measures like closures, with CEO Bruce Thorn noting that ongoing inflation was a major issue for the retailer's customer base.

However, Big Lots has been in trouble for some time now. As Matthew Debbage, CEO of the Americas and Asia at Creditsafe, told Retail Dive, "Their revenue, profit before tax, retained profit, total assets and net worth have all declined for the last two years. But their liabilities have increased for two years. This isn't a good combination."

RELATED: Wells Fargo Shutters 10 More Branches Amid Mass Bank Closures.

The Container Store

container store from outside
Eric Glenn / Shutterstock

The Container Store also has a FRISK Score of 2, putting its chances of bankruptcy between 4 and 9.99 percent.

It was another home brand that did well after the initial onset of COVID, but by the first quarter of this year, sales were down by 21 percent. The Container Store did layoffs in May, with CEO Satish Malhotra also taking a pay cut to help pay employees.


the entrance of a Petco store in Orlando, Florida

Rounding out the list is Petco, which has a FRISK Score of 2 as well. Keeping in line with this pattern, the company fared well during the pandemic, as people were home and had more time to adopt and attend to pets, Retail Dive reported. As an essential retailer, Petco also profited because it stayed open while other retailers were forced to close.

However, while sales were still up in August, Petco reported losses this quarter, which are again compounded by its debt.

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Abby Reinhard
Abby Reinhard is a Senior Editor at Best Life, covering daily news and keeping readers up to date on the latest style advice, travel destinations, and Hollywood happenings. Read more
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