Lord & Taylor, oldest U.S. department stores, goes bankrupt

On Monday, Lord and Taylor announced that it would be filing for bankruptcy. This comes as Tailored Brands, the owner of Men’s Warehouse, also files for Chapter 11. Yahoo Finance’s Emily McCormick joins The Final Round panel to discuss the latest in retail.

Video Transcript

SEANA SMITH: Welcome back to The Final Round. There's more trouble in retail. And this is a sector that has been struggling, to say the least, over the last several months in the midst of the coronavirus pandemic. Lord & Taylor today becoming the latest retailer to file for bankruptcy protection. This comes, of course, as the coronavirus just accelerates some of the trouble that we have seen facing this sector over the last several years.

And for more on this, we have Emily McCormick. And Emily, I mean, it's interesting here. Lord & Taylor is just the last name to do this. But we have heard similar stories from Neiman Marcus, from J Crew, from JC Penney, from Brooks Brothers, just to name a few of those retailers that have also struggled in the face of this pandemic.

EMILY MCCORMICK: Right, Seana. "Just to name a few" is really a good way of putting it. I think Bloomberg actually counted 10 big retail names in just the past five weeks alone that have filed for bankruptcy in the midst of the coronavirus pandemic. And just to give a few details on that Lord & Taylor filing, we had that company, as well as its owner, Le Tote, each filing for Chapter 11 bankruptcy protection yesterday.

This coming, of course, as Lord & Taylor had to temporarily shut 38 brick-and-mortar locations back in March-- of course, in compliance with those shelter-in-place orders across the country. Now, the company is planning on having a "going out of business" sale at its Lord & Taylor stores in a move to liquidate its brick-and-mortar locations. And that company had about $138 million in debt obligations based on its court filings. It also employed about 650 workers.

So if we think about some of the companies that we've seen over the past several months, really since mid-March-- these retail names going out of business, filing for bankruptcy, and potentially staying in business and just restructuring-- one of the key themes here really has been just high debt loads, of course, struggling with the shift to online shopping-- many of these have had really strong brick-and-mortar presences-- a lot of real estate. That's, of course, become a liability in the pandemic when they've had to keep up with rent payments despite people not actually going in physically to shop at these stores.

And another bankruptcy that I want to highlight as well is Tailored Brands, which is the owner of Men's Wearhouse. That also-- that announcement also coming in the past 24 hours. And similar to what we've seen here with Lord & Taylor, big debt load, operated quite a few retail locations across the US and Canada. Of course, that company is still not completely at 100% of stores having been reopened following the pandemic and those forced store closures.

So again, just seeing these themes come back up again and again. And possibly, potentially, we will be seeing more retail bankruptcies in the months to come as these continue to recur.

SEANA SMITH: Yeah. Emily, I wanted to ask you about that just because, if you take a step back and think about where we are right now, we still have-- just around 30 million people are unemployed, the number of coronavirus cases continuing to rise in numerous parts here across the country. So the trouble for retail could be far from over.

And you talked about the fact that the crisis has almost just accelerated some of the trends that were developing long before the outbreak. So the outbreak continues, and we're in the midst of the pandemic for several, several more months, which we likely will be. I mean, you would almost expect it to widen this gulf that we have been seeing between the retail winners and then the losers in that category.

EMILY MCCORMICK: Right, and I think that's something that we've already seen. I mean, if we look at the retail sales trends at the macroeconomic level, of course, those non-store retailers-- the e-commerce stores-- really being the winners here. Of course, seeing that slide, especially in April, in those department stores, in those clothing and apparel-type retailers.

But if we think about it, potentially, we could see private equity potentially come in, step in with these companies at a discount. It's not totally clear, you know, the value of just the intellectual property and what these brands actually can command anymore since a lot of these brands had also been struggling, as I mentioned, before the pandemic-- struggling to keep up with consumer trends.

If we think about Brooks Brothers, which is another one of those companies that filed in the past couple of months, struggling with the casualification of the office, for example-- and, of course, people definitely not necessarily looking for new suits now that work-from-home is so ubiquitous. So a lot of things to kind of keep in mind here as well. But with the back-to-school shopping season, normally, that would be taking place now. These companies are really flying blind into that season and for the holiday shopping season later this year.

SEANA SMITH: Yeah, they certainly are. All right. Emily McCormick, thanks so much for joining us on that.