Retail’s Big Shakeup: Major Brands File for Chapter 11 Amid High Debt and Stiff Competition

After Saks Global shuffled its C-suite over the past month, the luxury retailer filed for bankruptcy as has been widely anticipated following large ongoing negative comparable sales performance and an unsustainable debt load. The Chapter 11 filing follows a record year of business failures that has hit the retail sector particularly hard. While there were several factors impacting retailers in 2025, overleveraged debt loads played a key role.

Saks Global, the parent company of luxury retailers Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, filed for Chapter 11 bankruptcy protection late Tuesday. The move follows a period of intense financial strain caused by a massive $2 billion debt load accumulated during its 2024 acquisition of Neiman Marcus. This merger was intended to create a luxury powerhouse, but was ultimately undercut by very low inventory availability, high interest rates, cooling global demand for high-end goods,a significant shift in consumer behavior as shoppers moved away from traditional luxury department stores in favor of buying directly from luxury brands.

Despite the filing, Saks Global secured approximately $1.75 billion in new financing to keep its stores and websites operational while it attempts to restructure its debt. The company also announced a leadership transition, with former CEO Marc Metrick stepping down and Geoffroy van Raemdonck taking the helm to navigate the bankruptcy process. While the retailer said it intends to continue honoring customer programs and paying its employees, the filing highlights the ongoing volatility in the luxury market, where even storied institutions are struggling to maintain relevance amid economic uncertainty and changing retail trends. This week’s announcement of the new CEO and his team of experienced retail luxury executives should be viewed very positively.

The bankruptcy serves as a capstone to a challenging year for other retailers. In the U.S., those hardest hit were smaller-sized brands and retailers. According to the American Bankruptcy Institute, there were nearly 8,000 commercial bankruptcies in the U.S. last year. Of those, analysts estimate the number of retailers to represent 10 percent of the total.

High borrowing costs were one of the major reasons for the failures. Small retailers with floating-rate debt struggled to maintain cash flow as interest rates remained elevated throughout the year. Many apparel and gift retailers also cited the “de minimis” tax exemption (which allows foreign companies to ship low-value goods duty-free) as a primary reason they could no longer compete on price.

The year also marked the failures of many major brands in retail, fashion apparel, e-commerce and beauty. Notable chapter 11 filings for 2025 include Forever 21, Joann Fabrics, Right Aid, Party City, At Home, Bargain Hunt, Liberated Brands, Cosmoss Ltd, Closed GmbH, SSENSE, SKKN by Kim, IKKS and Lugano Diamonds & Jewelry Inc. As the year came to a close, iRobot, the maker of the Roomba vacuum, filed for Chapter 11 bankruptcy protection on Dec. 14, 2025

The retail sector was also hit with major store closures. The industry experienced more than 8,100 store closures in 2025, which is a 12% increase from 2024. Walgreens, Macy’s, Dollar General, CVS, Kohl’s, and Carter’s all shuttered hundreds of stores during the year.

Aside from the negative impact of tariffs, retailers across the board faced declining sales and loss of market share to Walmart, Costco, Amazon and the trio of discounters ( TJX, Burlington and Ross). But for many, the failures were often caused by the enemy within.

The “Private Equity” Effect

Industry analysts at Pistakeholder and Cornerstone Research noted a glaring trend in 2025: private equity-backed companies accounted for approximately 70% of large-scale bankruptcies (those with over $1 billion in liabilities). Loading retailers with debt to fund management fees, shareholder dividends or in the hope of deploying expansion strategies simply didn’t work in a year with inflationary price points, lower unit sales, and a more cautious consumer that is experiencing record high consumer debt levels. Overburdened with debt, these retailers were not able to stay afloat.

The following table highlights the most significant retail collapses of the year, their ownership status, and our opinion of the primary reasons for their downfall:

Retailer	Our view of the Primary Reasons for Bankruptcy	Private Equity Owned?	Notable PE Owner/Investor
Forever 21	Competition from Shein/Temu, high fixed store overhead	Yes	Authentic Brands Group, CVC Capital, Leonard Green
Joann Fabrics	Flagging sales, massive debt, failed turnarounds	Yes	Leonard Green & Partners
Rite Aid	Opioid lawsuit liabilities, $3 billion-plus debt, sluggish sales	No	Publicly traded (Post-emergence)
Party City	Helium shortages, post-COVID shifts, heavy debt load	Yes	Ad Populum (Acquired brand post-liquidation)
Claire’s	Mall traffic decline, high debt service, intense competition and changing teen habits	Yes	Elliott Management, Monarch Alternative Capital
At Home	Heavy debt load, Impact of new tariffs, high interest/debt service and high inflation	Yes	Hellman & Friedman
Bargain Hunt	Operational inefficiencies, stiff discount competition	Yes	Littlejohn & Co.
Liberated Brands	Inventory glut, rising costs of outdoor apparel	Yes	Authentic Brands Group

Reasons Why 2025 Was So Brutal

The “Triple Threat” of 2025 created a perfect storm for retailers:

1. The Rise of Cross-Border E-commerce: Overseas giants such as Shein and Temu leveraged the “de minimis” tax exemption to undercut U.S. brands like Forever 21 on price.
2. New Tariff Pressures: Increased import costs on textiles and electronics squeezed margins for specialty retailers like Joann and At Home.
3. The End of the “Zombie” Era: Higher-for-longer debt service costs finally forced retailers that were grappling with heavy debt loads from private equity take-overs

There was also the “mall squeeze” to contend with. Aside from a shuffling of market share, the wave of 2025 bankruptcies — led by Joann Fabrics, Forever 21, and Rite Aid — hit regional and indoor malls with surgical precision. The year-end data reveals a market of “haves and have-nots,” where luxury “Class A” malls thrived while “Class B and C” properties slipped toward obsolescence.

By the end of 2025, the national retail vacancy rate stood at a historically tight 4.3%, but this figure masks a deep divide between property types.

• Indoor/Enclosed Malls: Vacancy rates for indoor malls climbed to roughly 9% in 2025, up from approximately 5% in late 2024. The liquidation of anchor-adjacent tenants such as Forever 21 and the second collapse of Joann Fabrics as well as closure of numerous Macy’s stores left massive “dead zones” in secondary suburban malls.
• Open-Air & Power Centers: In contrast, open-air centers (where successful retailers such as TJX divisions or Ulta often reside) maintained vacancy rates as low as 4.5%, according to media reports. These centers benefited from “de-malling” — the trend of successful retailers moving out of enclosed spaces into standalone or strip-mall locations with better visibility and lower overhead.

The “Anchor Contagion” Effect

The 2025 bankruptcy cycle was particularly damaging because of co-tenancy clauses. When a major tenant such as Macy’s (which closed 150 stores through 2025) or Joann shutters a location, smaller mall tenants often have the right to pay reduced rent or break their leases early.

Reports from Cushman & Wakefield noted that 2025 bankruptcies didn’t just empty stores; it triggered a domino effect. The firm found that for every 100,000 square feet of anchor space lost, the company saw an average of 15% secondary vacancy in the surrounding wing within six months.

What Went Wrong at Saks?

Saks Global’s bankruptcy follows months of financial turmoil, missed vendor payments, and a widely criticized strategy that prioritized corporate “synergies” over the customer experience.

Underpinning the financial distress of Saks Global is an unsustainable capital structure. Following the multi-billion dollar acquisition of Neiman Marcus Group in late 2024, management became focused on exactly the wrong things. Instead of investing heavily in digital capabilities, upgrading and expanding its fleet of personal shoppers with big client lists and modernizing stores and websites, the retailer diverted critical funds and management attention toward debt service and the pursuit of cost-cutting synergies.

This inward focus created a “vicious cycle” where:

• Technical debt and necessary modernization of customer-facing capabilities  were not able to be funded, hampering growth.
• Vendors went unpaid, leading many luxury brands to stop shipping new inventory.
• Customer experience waned as the company prioritized balance sheet maneuvers over more important customer-facing capabilities.

The bankruptcy also highlights a fundamental shift in the luxury landscape. In recent years, high-end brands such as Gucci, Louis Vuitton and Chanel have opened their own flagship boutiques — often a very short walk from Saks or Neiman Marcus locations. This “Direct-to-Consumer” (DTC) shift has rendered the traditional multi-brand department store model increasingly obsolete. Why would a shopper visit a luxury department store to see a small, edited selection of SKUs from a designer brand when they can walk next door to a brand-owned boutique featuring an assortment of the full expression of their brand, together with expertly trained staff and a modern, relevant shopping environment?

Many argue that the only remaining reasons to visit a luxury department store are personal shopping services and access to exclusive experiences for high-end shoppers, as well as the desirable restaurants in many of the luxury department stores.

For the future, Saks Global now has leaders with exceptional luxury retail experience and who have a trusting relationship with brands. Unlike their predecessors, they will make decisions based on developing great brand relationships and creating exceptional customer experiences.