What is the next retail chain to go bust?

Investing and Markets 📈
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Sad state of affairs is our high street, but these are changing times.
What will be the next high street retail chain to go under ?

at 12p, I can see Mothercare is having the cr*p shorted out of her. Any other casualties on the horizon?

Next PLC?
M&S ?
French Connection?

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Possibly Next but M&S is a food store I’d assume they’re doing okay

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Tough to see a case where millennial and gen z would regularly shop at M&S. The cost is too high. 90% Aldi/Lidl and 10% Whole Foods. There is no inbetween.

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Shoe Zone

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Haha, that’s fortunately not true exactly :sweat_smile:
I’d never shop at Lidl/Aldi as a millenial and only shop at Waitrose/M&S and Wholefoods, same as most of my friends.
Much more worried about Sainsburys and Tesco. They’re trash, but not cheap. They’ll be killed off by Aldi/Lidl.

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If there is a case for M&S drop the list because that company seems a derelict dinosaur to me.

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Here’s a site that’s been cataloguing all the high street failures for years

My thoughts are with those shopworkers (and suppliers) who are affected by this and with their families too. Losing a job during a pandemic, at Christmas, with another economic crisis on the horizon and a ruling party that’s been hacking away at the social welfare safety net for over a decade… well I’m deeply worried for these people.

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The collapse of Philip The Parasite Green’s rag trading firm seems to have pulled the rug out from under Debenhams…

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Look for largely "offline’ retailers with no loyal customer base backed up by shoddy balance sheets, these will be the next set to fall - theres a few of them as well:

  • Hard to imagine Debenhams surviving. They should have sold out to Frasers group when they had the chance
  • River Island is looking precarious based on the last available accounts but the Arcadia news could well help them.
  • I’d expect consolidation in the Grocery sector from the old ‘big 4’ over the next 5 years. There is a race to the bottom & the top happening, being caught in the middle seems to be the worst place to be right now
  • Dixons Carphone is looking a little precarious too. Its actual debt is quite low but now that leaseholders have to capitalise their leases, this weights heavy on balance sheets. Margins are razor thin as well.
  • For the same reasons I’d be wary of Halfords. I know they’ve had a temporary lift from Covid but again they’re operating on razor thin margins with a heft loaded balance sheet.
  • I think the likes of Next & M&S will be fine (Next more so). Next has pivoted to online in a beautiful way & its capital allocation has been superb for many years now

I’d expect the Frasers & Boohoo model of ‘hoover up the good parts of failed companies’ will be the ongoing success of the next decade.

Traditional retail isn’t a pretty place to be in the UK right now. The % of the pie is shrinking & too many retailers don’t have a proper plan to go online - Covid is only going to accelerate this. You need to be a true to heart value investor to be putting money in the UK retail right now - sure there are bargains to be had but its just as easy to lose everything.

Not sure if its relevant for this topic or not but I’m of the opinion that Cineworld group’s future lies in the hands of 2 US states (California & New York). If they don’t bounce back quickly then the entire group will crumble. I personally think it is borderline criminal how this company is managed.

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Let’s go with Debenhams.

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Considering Whole Foods doesn’t have any branches outside of London I’d say your preferences aren’t really a good sample for the majority:

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Whole Foods isn’t going to go ‘bust’ as it’s owned by Amazon…

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The big problem in the UK is the high rent shops must pay combined with the rise of online shopping. Really wouldn’t surprise me if in 5-10 years time 50%-70% of shops were gone. My local shopping mall had a brand new Debenhams and a big John Lewis department store close never to open again. Covid has just speeded up what was going to happen anyway.

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The same thing happened in Birmingham. John Lewis invested heavily into the new New St station development only to close their store indefinitely this year

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When are the building owners going to be forced to take the hit on their investments and lower their rents? Whether that’s private owners, equity funds, pension funds, etc.

I think some kind of legislation is needed to protect high streets/town centres in order to keep buildings maintained and preferably occupied. Worryingly, in my town at least, the Tory MP is saying that it’s a wonderful opportunity to convert shops into ‘affordable housing’ which 1) would be the death of the high street and the jobs it creates/supports and 2) we all know that’s code for slum flats and bedsits, with buildings carved up by wealthy landlords and crammed with as many flats as possible.

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God, I couldn’t imagine anything worst for the high st

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The problem is the owners of the buildings frequently have large mortgages - and if the owners reduce rents they can’t pay back the mortgages…

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Can someone tell me why WHSMTH is still trading? what possible assets are keeping this dinosaur afloat?

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They have stores in Airports, Train Stations and hospitals which guarantees a big footfall, they will be one of the businesses that will be straight back into profit as soon as things go back to normal.
Personally don’t like them because of the ‘would you like to buy a giant Toblerone?’ question every time you go to the till.

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And here’s @DavidK latest piece on the Invest Hub.

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