The world seems to be changing faster than teen retailers can adjust. A number of popular brands have already declared bankruptcy, and several others could be next.
Since the beginning of 2015, four major teen retailers have opted for bankruptcy:
- Seal123 Inc WTSLQ (Wet Seal) filed for bankruptcy on January 15, 2015 after the company closed two-thirds of its stores and struggled with slumping sales.
- American Apparel Inc APPCQ opted for bankruptcy on October 5, 2015 when the company finally succumbed to its crippling debt load and sharply dropping sales.
- Pacific Sunwear of Caliornia, Inc PSUN also experienced the perfect storm of falling sales, huge debt and high rent costs and finally threw in the bankruptcy towel on April 7, 2016.
- Aeropostale Inc AROPQ was the latest teen retailer domino to fall when the company declared bankruptcy on May 7, 2016.
Related Link: Macy's Store Closings Creates Winners And Losers
Teen retailers have been a casualty of what many inventors see as a secular shift in teen buying habits. Not only are e-commerce names like Amazon.com, Inc. AMZN stealing share from brick-and-mortar mall retailers, today’s teens seem more interested in spending their money on gadgets than phones.
Unless they can crack the code on how teen retailers can survive in the modern shopping world, a handful of other names could be the next in line for bankruptcy. In the past 10 years, shares of American Eagle Outfitters AEO and Abercrombie & Fitch Co. ANF are down 26.9 percent and 65.2 percent, respectively.
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