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Lord & Taylor owner files for bankruptcy amid pandemic

Department store Lord & Taylor filed for bankruptcy. Yahoo Finance’s On The Move panel discuss.

Video Transcript

BRIAN SOZZI: Lord & Taylor, they were founded in 1826. They have filed for chapter 11 protection. You got Tailored Brands, which owns Men's Wearhouse and JoS. A. Banks, they filed for bankruptcy protection. And they're not alone, we've seen some of the big names this year file for bankruptcy protection, Neiman Marcus, JC Penney, Models, the sporting goods store. Brian Cheung, we expected retail to go through an evolution, but this is more of a catastrophic revolution, isn't it?

BRIAN CHEUNG: Well, and the challenge here is really passing out how much of these bankruptcies are due to secular trends that existed well before the COVID-19 crisis, and then ultimately facing their final fate with this pandemic that we find ourselves in. But when you look at a story like Lord & Taylor, that being the most recent company as of Sunday to go out of business. I mean, I speak very closely with the retail analysts, that's my mom who is a frequent shopper at Lord & Taylor. We lived across the street from one growing up in New Jersey.

And she was always saying, you know Brian, I got to say, Lord & Taylor I think is on the way out. So them filing for chapter 11 bankruptcy does show that my mom was correct on that. But when we look at Lord & Taylor as a retail brand facing the same fate as Macy's, JC Penney's, people don't go to these malls anymore. When you talk about that barbell approach, people maybe only wanting to go to large malls if it's extremely upscale or a discount outlet, it shows that those in the middle, those like Lord & Taylor are really the ones that get caught in the crosshairs.

The only problem is that I can't really see the trademarks for this company being as powerful as a target, as say J.Crew and Neiman Marcus, which also filed for bankruptcy but could find a savior in the form of some private equity firm. I don't know if Lord & Taylor is going to be able to find that.

- Brian, I think you bring up a lot of really good points about some of these retailers who have gone bankrupt, really falling under the pressure even pre-pandemic of this shift to online shopping, shift away from big department store footprints. And when you think about just some of the names that have filed in addition to Lord & Taylor, one of the ones that I feel is pretty analogous is just with Brooks Brothers, it's another company that's about 200-years-old, have been struggling with that shift away from that sort of Wall Street look having to be extremely put together, really dressed up for work, that casual bifurcation of the office space even before the coronavirus pandemic really taking a toll on that company.

Also, with Lord & Taylor as well if we just think about the number of direct to consumer retail brands that are now out there that are really very hyper focused on what a younger consumer is looking for, just the fashion trends overall I think is a big portion of this. And having a huge retail footprint, of course, not helping at all when they have to continue paying rent when people just aren't shopping in person with stay in place orders still in effect.