Former Toys “R” Us CEO Gerald Storch issued a gloomy forecast this week in an interview on Fox Business, saying that “we’re going to see record bankruptcies in retail” for small businesses and some chains.
More explicitly, he estimated there will be a “decimation” of mom-and-pop stores and a reckoning for “those chains that have been struggling for years strategically and never got it right.”
Storch’s comments echo a bleak sentiment from Elon Musk, who tweeted in late May that “some bankruptcies need to happen” and that a “rude awakening” is coming, though he didn’t specifically mention the retail industry.
Yahoo Finance explains how a recent acceleration in corporate borrowing costs – via the Federal Reserve’s recent rate hikes – supports Musk’s point. The article notes, however, that the economic slowdown and the Fed’s rate increases have “not been enough to undo the pandemic-era measures that still appear to be staving off the worst corporate outcomes.”
The most high-profile bankruptcies to happen this summer include Revlon and chemical manufacturer TPC Group.
Read more at Yahoo Finance.