The default risk for U.S. retailers eased slightly in May.
The overall retail default risk slipped to 2.1 percent from 2.4 percent in April—and even better were the defaults risks for fashion retailers.
Broadline retail slipped to 3.3 percent from 3.5 percent in April, with apparel retailers falling to 3.0 percent to 3.7 percent over the same period. Other specialty retailers fell to 2.9 percent from 3.8 percent, while the risk for apparel, accessories and luxury goods retailers was 1.5 versus the prior month’s 2.0 percent. Footwear retailers dipped to 0.9 percent from 1.1 percent in April.
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The two retail sectors that saw in increase in default risk were drug retailers, rising to 6.7 percent from 6.5 percent, and home furnishing retailers, which hit 2.7 percent from 2.4 percent.
So far, the only U.S. fashion retail bankruptcy was fashion chain Rue21, which filed on May 2. April’s default risk for retailers was up due to the bankruptcies of mall fashion chain Express Inc. on April 22, kitchen and bath showroom retailer Pirch Inc. on April 19, and 99 Cents Only Stores‘ parent Number Holdings Inc. on April 7.
Thus far, there have just been 14 retail bankruptcies in 2024. Other retailers that have filed include Sam Ash Music Corp on May 8, craft retailer Joann Inc. on March 18, and home improvement site Polished.com Inc. on March 7. With inflation rising as it has, consumers have been pulling back on discretionary purchases, focusing on must-need items on their grocery lists.
