Retailers Continue to Struggle in Q1’16

Retailers suffered significantly at the end of 2015 and in the first quarter of 2016, with many companies filing for Chapter 11 bankruptcy or preparing to file in the near future. A shift in consumer shopping trends and rapidly changing consumer tastes, coupled with the growth of eCommerce and fast-fashion, catapulted many niche retailers into insolvent financial positions. The growing presence of Amazon and other eCommerce retailers has introduced yet another hurdle that these companies must overcome. Retail turnarounds will continue throughout 2016, with a high likelihood of many branded retailers finding themselves filing for Chapter 11 in the coming months.

One bankruptcy filing that may come as a surprise is private equity-backed Sports Authority; this is especially unexpected, as the retailer occupies a growing segment of the broader retail industry. Athletic gear continues to rapidly gain popularity among consumers as more and more individuals are sporting athletic wear to a wider array of functions; no longer do sneakers and athletic gear only serve a purpose during exercise.

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