Tuesday Morning, the discount home goods retailer, filed for Chapter 11 bankruptcy protection Tuesday, its second bankruptcy in three years.
It’s the latest example of the retail apocalypse, which is starting to creep back.
Tuesday Morning’s previous bankruptcy came during the initial months of the Covid-19 pandemic. The chain said Tuesday it must restructure its “exceedingly burdensome debt.” It has secured $51 million in financing to keep operations running.
The company, based in Dallas, Texas, has about 480 stores, down from around 700 three years ago. It plans to close unprofitable stores and cut costs.
Tuesday Morning joins a growing number of financially distressed retailers that have filed for bankruptcy this year. Consumer spending has slowed down in the face of inflation, and interest rates have increased, making it costlier for companies to borrow.
Party City’ Serta Simmons, the mattress manufacturer; and Independent Pet Partners, a pet store retailer, have declared bankruptcy in recent weeks. Bed Bath & Beyond narrowly avoided a bankruptcy filing by raising stock and announcing plans to close 400 stores. But its future is uncertain.
The retail sector’s struggles are a reversal of industry trends for much of the pandemic.
After an initial burst of bankruptcies, consumers dished out on clothing, furniture, electronics and other goods. Retail sales surged and consumers propped up struggling chains.
But holiday sales were sluggish and the industry is expected to have a weaker 2023. Around 2,800 stores will close this year, an 8% increase from last year, according to Coresight Research.
Rite Aid, Joann Fabric and other chains are also on bankruptcy watch, according to credit rating agencies. These companies have struggled for years and are most vulnerable to challenging economic conditions.