Navigating Retail Bankruptcy Waves: Finding Resilience and Profit in Mall Store Sector Restructurings

The retail sector is undergoing seismic shifts, with Chapter 11 filings and store closures reaching historic levels. Between 2024 and 2025, over 15,000 U.S. retail stores closed, driven by inflation, e-commerce disruption, and shifting consumer preferences. Yet amid this turmoil, opportunities abound for investors to identify resilient retailers and capitalize on industry consolidation. This analysis explores which companies are weathering the crisis, sectors primed for recovery, and strategic plays to profit from the retail reset.

The Bankruptcy Tsunami: Key Trends and Casualties

The past two years have seen a wave of mall-based retailers seeking Chapter 11 protection or liquidation. Notable casualties include Bed Bath & Beyond (all 360 stores closed by 2023), Party City (liquidated in 2025), and Rite Aid (filed for Chapter 11 in late 2023). These failures stem from a toxic mix of excessive debt, inability to adapt to e-commerce, and declining mall foot traffic, which hit 8.7% vacancy rates by late 2024.

Why the crisis?
- Economic pressures: Inflation (peaking at 9% in 2022) squeezed discretionary spending.
- E-commerce dominance: Online sales now account for 16% of U.S. retail, diverting traffic from malls.
- Operational strain: Rising labor costs (up 14% since 2020) and theft losses ($112B in 2022) eroded margins.

Identifying Resilient Retailers: Criteria and Winners

Not all retailers are failing. Some have leveraged Chapter 11 to restructure debt, pivot to online-first models, or secure strategic partnerships. Key traits of survivors include:
1. Strong liquidity and manageable debt
2. Digital-first strategies
3. Partnerships with mall owners
4. Niche or experiential offerings

Case Studies of Resilience

• Joann (JOAN): Despite filing for bankruptcy in 2025, Joann emerged by selling assets to Variety Wholesalers and retaining a private equity buyer. Its focus on craft supplies—a category with enduring demand—supported recovery.
• Express (EXPR): The apparel retailer secured a non-binding deal with mall landlords Simon Property Group and Brookfield to acquire 90% of its stores. This partnership reduced rent burdens and preserved its core customer base.
• The Container Store (TCS): Maintained store operations during Chapter 11 by renegotiating leases and cutting costs. Its niche in home organization provides a steady demand stream.

Sectors and Companies to Watch

1. Luxury and Experiential Retail

Luxury brands like Tiffany & Co. (TIF) and Michael Kors (KORS) are thriving, as discretionary spending shifts toward aspirational purchases. These brands often occupy prime mall locations and benefit from high margins.

2. Omnichannel Retailers

Companies with robust e-commerce platforms, such as Target (TGT) and Walmart (WMT), are outperforming pure-play mall retailers. Their ability to blend online and in-store experiences attracts cost-conscious shoppers.

3. Mall REITs and Real Estate Plays

Mall owners like Simon Property Group (SPG) and Macerich (MAC) are repurposing vacant spaces into offices, apartments, and fulfillment centers. Investors can bet on their ability to monetize distressed assets.

4. Debt Restructuring Specialists

Firms like Apollo Global Management (APO) and Blackstone (BX) often acquire distressed retail assets at discounts, offering potential upside for investors through their private equity funds.

Investment Strategies for the Retail Reset

1. Short the Vulnerable: Bet against retailers with high debt, weak online presence, or reliance on declining categories. Examples include Forever 21 (F21) and Big Lots (BIG).
2. Buy the Resilient: Invest in survivors like Joann (JOAN), The Container Store (TCS), and mall REITs with adaptive strategies.
3. Sector Rotation: Shift capital toward luxury (e.g., Ralph Lauren (RL)), omnichannel leaders (e.g., Home Depot (HD)), and e-commerce enablers like Shopify (SHOP).
4. Monitor M&A Activity: Chapter 11 proceedings often lead to asset sales. Track buyers like Simon Property Group or private equity firms for undervalued deals.

Conclusion: The Retail Landscape is Being Reborn

The current retail crisis is not an end but a transition. Investors who focus on resilient balance sheets, strategic partnerships, and adaptable business models will find opportunities in this restructuring. While mall foot traffic may never return to pre-pandemic levels, the survivors—and the companies profiting from their transformations—are shaping the future of retail. For those willing to look past the carnage, this era of consolidation offers a clear path to profit.

Actionable Takeaway: Consider a portfolio mix of 30% mall REITs (e.g., SPG), 40% omnichannel retailers (e.g., TGT), and 30% luxury/experiential stocks (e.g., KORS) to capitalize on the evolving sector.

Data as of June 19, 2025.