The real reason retail bankruptcies are surging

Business bankruptcy filings hit a 14-year high in 2024, marking the highest number of corporate bankruptcy filings in the U.S. since the Great Recession. Christine Short, head of research at Wall Street Horizon, a TMX Company, joined TheStreet to discuss the factors driving the wave of retail bankruptcies and reveal which companies may be next.

Related: After bankruptcy, retail chain liquidates stores, seeks buyer

Full Video Transcript Below:

CHRISTINE SHORT: I mean, you have a softening of the consumer paired with some very high competition. We know a lot of these names lose out to the big box retailers. It's those big box names that are able to negotiate on prices that are able to move manufacturing, that are able to absorb some of the higher cost of tariffs, although we've seen many say even Walmart, as big as it is, saying they're going to pass down onto consumers. So you have to have the right product mix and a brand that consumers are willing to still spend at. 

But you also have to have that negotiating power. You have to have the ability to move manufacturing. And so I think that's why you're seeing a lot of the big guys in the space doing very well. And that makes it hard for from some smaller entrants. If they can't absorb tariffs or negotiate with suppliers, it's going to be difficult for them. And I don't know that the consumer has the wherewithal to sustain some of the price increases. We're hearing about that. You know, even Steve Madden said they would increase prices. And, you know, they gave an example of how expensive certain shoes could get. And I'm not sure that the consumer is going to want to spend that much more on discretionary items.