2020 will go down in history for many dubious distinctions, including retail bankruptcies. There were more than three dozen bankruptcy filings from national and regional chains as stores closed due to Covid-19, which decimated sales for unnecessary brick and mortar stores.

The number of customer facing companies that have been restructured in court is even greater when you include fitness centers like 24-hour fitness and restaurant chains like Chuck E. Cheese, both of which have been cleared for bankruptcy.

Overall, retail filings resulted in a record default rate of nearly 20%, meaning a fifth of all retailer-held high-yield loans totaling $ 10.6 billion had defaulted in the past 12 months, according to rating agency Fitch.

According to Eric Rosenthal, senior director of leveraged finance at the firm, the value of $ 10.6 billion is almost double the previous high of $ 5.7 billion in 2017.

Cases include some of the largest retail bankruptcies in recent years, including those of luxury supplier Neiman Marcus and department store banner JCPenney.

“Most of the defaults that we expected to see over the next several years, with or without a pandemic, have occurred,” said David Silverman, retail analyst at Fitch, noting that there were no surprises.

Not all retailers filing for bankruptcy protection did so because of short-term debt maturities.

Tailored Brands, the parent company of Men’s Wearhouse, is an example of a retailer who used Chapter 11 “strategically”.

“We believe that some retailers took advantage of the 2020 bankruptcy process to both clean up their capital structures and improve their store portfolios by closing stores faster than their rental terms would otherwise allow,” said Silverman.

The good news for non-essential retailers who struggled in 2020 is that 2021 looks relatively more promising with vaccine distribution.

In addition, some level of herd immunity could be achieved by early fall, said Dr. Anthony Fauci during a Facebook interview with California Governor Gavin Newsom on Wednesday. This would bring a return to normal and likely spur apparel, accessories, and beauty sales, as well as dining, travel, and entertainment sales in the second half of the year, Silverman said.

According to the outlook for 2021, rating agency Moody’s will say department stores, off-price and specialty stores are likely to see the largest surge in operating profit in 2021, although it will take several years for clothing to return to pre-pandemic levels.

Rating agency S & P’s expectations go in the same direction, assuming that consumers will return their dollars to experience in the second half of the year, after continuing their current spending patterns in the first six months of 2021.

Immediately, retail will get a small boost from a $ 900 billion stimulus package signed on Sunday evening.

On the other hand, and perhaps ironically, the New Year could prove to be more challenging for major retailers (of which Target and Home Depot are examples), who, according to Silverman, did well during the pandemic. This is because their sales are likely to be below the heady 2020 levels as consumers redistribute dollars for travel, food and entertainment in the second half of the year under a new normal, he said.

“We actually believe that 2021 could generally be a more challenging year for retailers,” said Silverman.

In particular, Moody’s indicated that groceries are expected to see a decline in operating profit in 2021.

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