6 Stores That May Completely Go Out of Business This Year, Experts Say
It may be the last hurrah for these beloved retailers.
With the new year in full swing, most of us are still thinking about fresh starts, but for a handful of beloved businesses, 2023 might just mean the end. With inflation and the aftermath of COVID still affecting the economy, many retailers are on their last leg. Sadly, this year may be your final chance to stock up on items from some of your favorite shops (at least in person). Read on to see the six stores that may completely go out of business this year.
JOANN, formally known as Jo-Ann Fabrics, is struggling to stay afloat in the new year. During the height of the pandemic, the crafting haven actually saw an increase in sales with more people than ever picking up new hobbies like sewing and knitting during lockdown. But as the world has slowly returned to normal (or the new normal), JOANN has had a difficult time keeping their numbers up.
During the second quarter in September of 2022, "net sales declined by 6.8 percent compared to the same period last year to $463.3 million, with total comparable sales decreasing 6.2 percent," reported the Global News Wire. In terms of JOANN's gross profit, this also decreased by 20 percent compared to the same time last year. As of July 22, 2022, JOANN had a debt of $1.1 million dollars with "cash and cash equivalents of $21.5 million."
Things continue to look dire for company: They recently announced it will be closing several stores on Jan. 22. Though it has not officially gone out of business, it's hard to know if the remaining arts and crafts stores will make it through the year.
Morphe Cosmetics, a cosmetics and beauty manufacturer founded in 2008 most known for its partnerships with beauty YouTubers like James Charles, Jeffree Star, and Jaclyn Hill, is closing its doors. The company is shutting down all of their 18 stores in the U.S., 10 of which are in California.
On January 5, Morphe released a statement on their Twitter account saying, "We have made the difficult decision to close all Morphe stores in the U.S. We are forever grateful to our store teams for their passion, talent, and dedication over the years."
This news comes after the company was hit by several lawsuits over the last year, including one by the owners of Arden Fair Mall, where Morphe allegedly failed to pay rent in 2022. Furthermore, Morphe's parent company, Forma Brands has now filed for bankruptcy.
The demise of Sears has been playing out for many years; they have continuously closed stores since it filed for bankruptcy in Oct. 2018. But 2023 may be the year the once-ubiquitous retailer officially shuts its doors for good.
"The company decided to sell off parts of itself to help generate income and diversify its revenue stream, but to little avail, as the company wasn't able to make profits," Peter Varadi, retail expert and CEO of Market Gap Pro tells Best Life. "It's also important to note that the company hasn't made a full-year profit since 2011. Due to these reasons, 2023 might be the year Sears goes extinct."
On Dec. 13 of last year, Sears Hometown, a subsidiary branch of the department store giant, also filed for bankruptcy and closed 115 stores. Today, according to CNN, the company has just 121 stores remaining across the U.S. (it had more than 700 in its heyday), while its parent company, Sears, has only 21 left (it had over 3,5oo at its peak when it merged with KMart).
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Bed Bath & Beyond
Bed Bath & Beyond, another large retailer with a grim year ahead, has been outfitting our homes with linens, towels, and more since 1971. But on Jan. 5, the company warned the public that they may be in trouble.
In a business update, the company stated: "For the third quarter of fiscal 2022 (ended November 26, 2022), the Company expects to report Net Sales of approximately $1.259 billion compared to $1.878 billion in the year ago period, reflecting lower customer traffic and reduced levels of inventory availability, among other factors."
They concluded "that there is substantial doubt about the Company's ability to continue as a going concern."
This did not come as a shock to Elisa Bender, a retail expert and co-founder of Revenue Geeks. "Bed Bath & Beyond has not been doing well in terms of sales, which is why the announcement was not a surprise," she told Best Life. "This company is likely to go completely out of business this year."
It's no surprise that Party City had a huge lull in sales during the pandemic when we were social distancing rather than gathering. But even now, as people are back on the party circuit, the largest retailer of party supplies is still having trouble.
Yahoo! reported that this lull could be due to people opting for destination celebrations rather than in-home parties now that lockdown is a thing of the past, and this is reflected in Party City's dismal numbers.
For their third quarter summary in November 2022, there was a decline of 1.6 percent compared to the third quarter in the previous year; comparable sales also decreased by 3.2 percent. After this slow Halloween season, chief executive officer Brad Weston announced that Party City would be cutting 19 percent of its workforce.
It's not looking good for the retailer, but we do hope the party isn't over in 2023.
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Rite Aid may no longer be able to compete with its chain drugstore counterparts CVS and Walgreens. While the population is overjoyed that the height of the pandemic is behind us, it has caused some major issues for the struggling business.
According to Business Wire, "Revenues for the quarter were $6.08 billion compared to revenues of $6.23 billion in the prior year's quarter, largely due to a reduction in revenue from COVID vaccines and testing, store closures, and a planned loss of covered lives at [insurance company] Elixir."
Rite Aid closed 145 unprofitable stores in 2022 and may close even more "underperforming locations" in 2023, reported Forbes. "I think what I would tell you is there is an opportunity to close more stores," Rite Aid executive vice president Matt Schroeder told analysts last December.
However, there is a glimmer of hope, with Schroeder saying it would not be as many as last year.