Retailers have been divided into two distinct groups: the haves and the have nots.
And the have nots are gasping for air.
After a tumultuous year that has included more than 9,200 store closures and the liquidation of chains like Payless ShoeSource, Gymboree and Charlotte Russe, a slew of national retailers are heading into 2020 on thin ice.
When you combine digital disruption with "a certain amount of Darwinism" that leads to "natural selection" every year in the ultra-competitive retail sector, it's a recipe for upheaval, said Charlie O'Shea, a vice president and lead retail analyst at Moody's Investor Service.
"Things can get geometrically bad quickly, and that's what we've seen," he said.
As of Dec. 5, Moody's listed 17 retail or apparel companies with credit ratings of Caa1 or lower, the level at which companies are considered a big risk for lenders.
When companies fail to pay their debts, bankruptcy is often the next step as Chapter 11 allows retailers to break leases on money-losing stores and slash loans. Some emerge victorious, and others end up shutting down.
USA TODAY reached out to the retailers included here. They either declined to comment or didn't respond to requests for comment by press time.
These retailers are gearing up for a crucial 2020:
J.C. Penney
This department store chain is scrambling to get traction. With more than a year under her belt now, CEO Jill Soltau is still unfolding a turnaround plan. In 2019, the Texas-based chain closed 27 stores, ended sales of appliances and furniture and placed the company's focus back on its bread and butter: compelling apparel and related merchandise.
There were signs of life in the third quarter, when the company narrowed its net loss, compared with a year earlier. But with a projected same-store sales decline of 5% to 6% for the 2019 fiscal year, when factoring out the impact of no longer selling furniture and appliances, time could be running out.
The company's stock has been trading below $1.20 for the last several months. Fitch Ratings listed J.C. Penney among its "top loans of concern list" for 2020.
"The all-in shopping enthusiast is driven by style and newness, and continuing to deliver on this is key," Soltau told investors in November. "Furthermore, understanding how this customer lives their life is critical to our success."
J.C. Penney is testing out ways to reinvent itself. At a remodeled store in Hurst, Texas, simply called Penney’s, the company has added a yoga studio, video game lounge, style classes and high-tech, personalized dressing rooms.
Rite Aid
With a Moody's credit rating of Caa1 and trending down, Rite Aid's outlook is gloomy.
The company is stuck in an uncomfortable netherworld: not big enough to present a big threat to drugstore rivals Walgreens and CVS but not agile or rich enough to reinvent itself.
Rite Aid also faces the additional threat of disappointing health care insurance reimbursement rates and generic drug costs, according to CFRA Research.
A few bad breaks haven't helped: A merger deal with grocery chain Albertsons collapsed in 2018, leaving the company's path to reinvention unclear.
On the stock market, Walgreens' total market capitalization is well over 100 times the value of Rite Aid, while CVS is worth more than 200 times Rite Aid after recently acquiring insurer Aetna.
Neiman Marcus
The luxury department store chain completed a debt restructuring plan in 2019 that included what S&P Global Ratings considered to be a "distressed" exchange.
After the move, S&P rated the company as a "continued risk of restructuring."
Put simply, luxury shoppers aren't spending as much time in department stores like Neiman Marcus and the company's Bergdorf Goodman chain. Look no further than rival Barney's, which liquidated in 2019.
Same-store sales have been drifting down in recent quarters for Neiman Marcus. After increasing 2.8% in the first quarter of 2019, they rose only 0.7% in the second quarter and fell 1.5% in the third quarter.
Moody's ranked the company as Caa3 as of Dec. 5, which means it has a "very high credit risk" and was close to a downgrade to Ca, which is "very near" or "likely in" default.
J.Crew
Like other apparel retailers with a heavy commitment to shopping malls, J.Crew is grappling with declining foot traffic. The long-distressed retailer announced on Dec. 2 that it had agreed to terms to separate its J.Crew stores and Madewell women's apparel business into independent companies.
The move would be "tantamount to a default" because "lenders would receive less than what was originally promised," according to S&P Global Ratings.
The good news: Madewell is in solid shape and will be spun out in an initial public offering that will lead to "sustainable capital structures" for both companies, interim CEO Michael Nicholson said in statement Dec. 2.
The bad news: J.Crew's same-store third-quarter sales fell 4%.
In 2019, 62% of store closure announcements came in the apparel sector, according to global marketing research firm Coresight Research.
David's Bridal
More than a year after David's Bridal filed for bankruptcy protection, the wedding retailer is still waiting for its honeymoon.
Although the chain survived Chapter 11 – a process that has felled many struggling retailers in recent years – the company's performance in the succeeding months was disappointing, partly because of declining foot traffic and negative cash flow.
Now, with a new CEO on board, the nation's largest wedding retailer is trying to reinvent itself as it heads into its most important period of the year: the months immediately after the traditional rush of engagements during the holidays. The company has cut some prices, loosened its return policy and added additional sizes.
In November, the company announced it had completed a debt-for-equity exchange and landed additional capital from its lenders. That could provide some runway for a while.
Sears and Kmart
Bankruptcy hasn't stopped the closings for the struggling retail siblings.
Sears and Kmart have closed more than 3,500 stores and cut about 250,000 jobs over the last 15 years. More than 14 months after filing for Chapter 11 bankruptcy and narrowly escaping total liquidation after a last-minute sale in February to its longtime investor and former CEO Eddie Lampert, the retailer is a shell of its former self.
A federal bankruptcy judge approved the sale to Lampert's company TransformCo, which at the time said it planned to keep about 400 stores open.
In February 2020, another 51 Sears and 45 Kmart locations will shutter in the latest round of closures. After recently announced closings are complete, 182 stores are expected to remain – for now. By comparison, J.C. Penney has 846 stores as of November.
The retailers have been ailing for years, battered by digital competition, the decline of foot traffic and a lack of innovation in stores.
Pier 1 Imports
Home goods retailers haven't been immune to closings.
In April, Pier 1 Imports announced it could close as many as 145 stores, about 15% of its nearly 1,000 locations. A week later, S&P Global Ratings warned that the "potential for a bankruptcy filing or debt restructuring is continuing to increase" for Pier 1 as its retail performance continues "to deteriorate significantly."
Then-interim CEO Cheryl Bachelder repeated that "up to 15%" of locations could close on Sept. 25 during a quarterly earnings call with analysts and said officials were working with A&> Realty to "determine the ideal footprint."
"We have been holding active discussions with our landlords and are continuing to make progress in realizing occupancy cost reductions," she said, adding officials "decided to close approximately 70 stores in fiscal 2020 and expect that number to increase."
Forever 21
Women's fashion retailers have had a tough year in 2019. Charlotte Russe, Charming Charlie and Avenue Stores all went bankrupt and closed all of their locations.
Fast-fashion retailer Forever 21 filed for Chapter 11 bankruptcy protection in late September after being hobbled by expensive leases, declining mall traffic, digital competition and fashion choices that fell flat.
The company had about 785 stores worldwide when it filed for bankruptcy protection, including 534 U.S. stores, and is considered one of the largest specialty apparel retailers in the country. The family-owned company's stores average 38,000 square feet, making it smaller than the average department store but larger than many of its apparel competitors.
Foever 21 said it is closing "most" of its stores in Asia and Europe. According to a list filed in court in late October, 111 U.S. stores are closing. However, more could follow, which is what has happened with past bankruptcies including Toys R Us and Sports Authority.
“This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21,” Forever 21 executive vice president Linda Chang said in a statement when the bankruptcy was announced.
Ascena Retail Group
Ascena Retail Group announced in 2019 that it would shutter the 544 stores in its Dressbarn value brand by the end of the year, part of the New Jersey-based retailer's nearly 3,400 locations.
Its other brands include Ann Taylor, Ann Taylor Loft, Lane Bryant, Catherines and the Justice tween brand.
The company sold Maurices, its other value brand, in 2019 and also sold the intellectual property assets of Dressbarn to a subsidiary of Retail Ecommerce Ventures LLC. A new Dressbarn website is likely to launch on or about Jan. 1, but all current gift cards need to be redeemed by the end of 2019 or while merchandise remains.
In November, S&P downgraded Ascena's credit rating because the group "continues to post weak results and faces increasingly intense industry difficulties."
S&P said it believes "it is increasingly likely the company will pursue a debt restructuring over the next 12 months."
In a Dec. 10 earnings call, Carrie Teffner, Ascena's interim executive chair, said the company was doing a portfolio review to "evaluate options to enhance shareholder value."
"We have a portfolio of strong brands, three of which individually generate revenue of approximately $1 billion or more, are focused on driving all our brands combined with a streamlined backend," Teffner said.
Follow USA TODAY reporters Nathan Bomey and Kelly Tyko on Twitter @NathanBomey and @KellyTyko.
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