Many U.S. retailers are laboring under a mountain of debt, turning the season into a high-stakes fight for survival. These six chains — Sears, Nine West, Claire’s Stores, Charming Charlie, Bon-Ton Stores and J. Crew — have the most riding on holiday sales.

Share story

The holiday season is always a pressure cooker for retailers, but this year promises to be more stressful than usual.

With foot traffic dwindling and more consumers shopping online, brick-and-mortar chains are having to fight harder for customers. Many U.S. retailers also are laboring under a mountain of debt, turning the season into a high-stakes fight for survival.

More retailers are at risk of running out of cash or defaulting on debt now than at the peak of the last recession, according to Moody’s Investors Service, and subpar holiday sales could deepen their distress. To be sure, wide-open credit markets have kept a lot of overleveraged retailers chugging along with even more borrowed money. But time is running out for several well-known names at the local mall, some of which may not be around next holiday season — at least not in their present form or in the hands of their current owners.

Here are some of the chains that have the most riding on holiday sales as Christmas nears.


It’s hard to imagine holiday shopping without Sears, the 131-year-old department store whose Wish Book was a Christmas staple for much of the 20th century. But a Sears-free existence is already the reality in many cities across the U.S. after hundreds of store closures.

The company has lost more than $10 billion in recent years, and it warned in March that its ability to keep operating is uncertain. Same-store sales have continued to decline, falling 17 percent last quarter.

Concerned suppliers have begun demanding tighter payment terms and are even withholding delivery of products — an echo of the supply crunch that preceded the September bankruptcy of Toys R Us. But Sears has been able to rely on help from Chief Executive Officer Eddie Lampert, a hedge-fund manager who serves as the company’s biggest investor.

Nine West

Shoe and clothing maker Nine West has one of the highest leverage ratios in the retail industry. In January its debt load was about 18 times its adjusted earnings, according to Moody’s. Bondholders have been working with advisers since at least September to come up with a financial rescue plan, but analysts say the company is most likely heading toward a distressed exchange or restructuring.

“The company’s leading position in the U.S. footwear and accessories market is eroding, given the marketing missteps and the quality and fit issues with some of its key brands,” Suyun Qu, an analyst at S&P Global Ratings, said in an August report. The high debt ratio and money-losing operations are “likely to drive Nine West toward a debt restructuring or exchange over the next year,” she said.

Claire’s Stores

Even after two distressed exchanges in the span of six months, Claire’s Stores is still under the gun to turn itself around. The accessories seller needs to pay off or refinance $1.3 billion in maturities in 2019. With leverage around 11 times earnings, Claire’s has little room to breathe — and bond prices reflect its tough position. Claire’s 9 percent first lien notes due in 2019 trade at about 60 cents on the dollar, and its 8.875 percent second lien notes trade closer to 20 cents.

“Claire’s liquidity pressure remains acute and financial flexibility is limited,” Bloomberg Intelligence analyst Noel Hebert wrote in a September report. “This may require a restructuring over coming quarters if turnaround efforts are slow to bear fruit.”

Charming Charlie

This Claire’s competitor is in a tight spot, too, after recent efforts to nab bridge financing for the holiday season came up short.

S&P cut its rating on the clothing and accessories brand in October, saying it expected negative free operating cash flow for both 2017 and 2018. The Houston-based retailer — owned by private-equity firms TSG Consumer Partners and Hancock Park Associates — is expected to breach covenants or pursue a distressed exchange over the next 12 months, the firm said.

Bon-Ton Stores

Bon-Ton Stores is living paycheck to paycheck — or, loan to loan. The department-store chain received a lifeline from its bank lenders last month, when it amended its $880 million asset-backed credit line in an effort to maintain sufficient cash to get through the holiday season. The extension came in response to wary vendors scaling back shipments to the chain and asking to be paid sooner to protect themselves from potential losses in case Bon-Ton’s turnaround plans fail.

Bon-Ton has been plagued by shrinking sales and mounting losses, and CEO Kathryn Bufano left the company earlier this year, creating further upheaval. The chain has been taking steps to stem its losses and keep up with debt payments. That’s included hiring restructuring advisers and completing a sale-and-leaseback transaction in September in an effort to boost short-term liquidity and buy breathing room. S&P and Moody’s both cut Bon-Ton’s rating this week, citing a heightened risk of a restructuring or distressed exchange.

“We are taking more aggressive actions to fuel improved performance as well as strengthen our financial position,” Bon-Ton Chief Executive Officer William Tracy said in the company’s quarterly financial statement last week. “We are working with our advisers to proactively engage with our debtholders to establish a sustainable capital structure to support the business.”

J. Crew

J. Crew Group has been at odds with its lenders all year, after a restructuring moved the company’s iconic brand name out of reach of secured creditors and incurred new debt against it. According to S&P Global Ratings, J. Crew’s term-loan lenders now stand to recover as little as 15 percent in a bankruptcy. The company’s total debt was at $1.7 billion as of Oct. 28, up from $1.5 billion a year earlier. Despite extending the most near-term maturities, the company’s liquidity remains “less than adequate” and its capital structure is “unsustainable in the long run,” S&P analysts wrote in a report upon completion of the deal.

On top of its debt drama, the clothing company lost both its creative director, Jenna Lyons, and her replacement, lead designer Somsack Sikhounmuong, within months. New CEO James Brett took the reins from longtime leader Mickey Drexler in July and is trying to turn around the decline in revenue and comparable-store sales at the label. The company skipped New York Fashion Week in September for the first time in six years.

J. Crew posted its latest quarterly results Tuesday. And while there are signs of promise at its Madewell brand, the company’s flagship chain continues to sputter.

J. Crew’s same-store sales fell 12 percent in the period, compared with a 9 percent drop a year earlier. The company said it expects to close about 50 stores this fiscal year.

A spokeswoman for J. Crew and a spokesman for Nine West declined to comment. Representatives for Sears, Claire’s and Charming Charlie didn’t respond to messages seeking comment.