By Mark Seavy  

The licensing industry is scrambling to offset potential revenue losses amid a flurry of bankruptcies and store closings.  

Licensees and licensors are reimagining their strategies to deal with the bankruptcies and liquidations of retailers like Joann Fabrics, Party City, and Big Lots, as well as Forever 21’s restructuring.   

Many of the licensing executives we polled expect Amazon, Target, and Walmart, along with off-price retailers like T.J. Maxx and Ross Stores, to pick up some of the bankrupt retailers’ business outside of food. Michael’s and Hobby Lobby are expected to absorb a large portion of Joann Fabrics’ crafts business, for example, while Hobby Lobby and Walmart are expected to gain in fabrics.  

The impact of this retail restructuring is not expected to ease any time soon. About 15,000 retail locations are forecast to shutter this year in the U.S. alone, according to Coresight Research. This represents a pace of closures not seen since the end of the pandemic and one that is up 300% from last year, when 5,970 retail locations closed. At the same time, about 5,500 stores will open this year, Coresight reported.  

Other retailers have been quick to secure these newly freed leases. The 568-store Ollie’s Bargain Outlets is taking over leases on 63 former Big Lots locations, while Variety Wholesalers—which already has 380 locations under the Roses Discount Stores and Maxway brands—will operate 200 more stores under the former retailer’s banner.   

Dollar Tree, meanwhile, was expected to get court approval late last week to assume the leases on 148 former Party City stores. And Joann Fabrics, which announced plans for closing 500 locations in filing for bankruptcy in January, will now shutter the remaining 300 stores after a deal with liquidator GA Group to acquire its assets collapsed.  

“The reality is that there is no way to make up the loss of business from the store closures in the short-term [12 months],” Concept One Accessories CEO Sam Hafif said. “Those lost wholesale orders will not be replaced, and licensors will feel it when they get their updated forecasts. However, from a long-term perspective, the consumers will shift the purchases to other brick-and-mortar retailers and Amazon, with Amazon gaining the most from the disappearance of these retailers.”  

Among the most recent restructurings is Forever 21, which unveiled plans last week to close 200 stores in addition to shutting its Los Angeles, CA headquarters. It also laid off 358 employees starting April 21st, including its chief financial officer and chief merchandising officer. The retailer also was said to be weighing filing for bankruptcy protection for the second time.   

Forever 21 first filed for bankruptcy in 2019 and is said to be seeking buyers for remaining locations. Authentic Brands Group, in a joint venture with Simon Property Group and Brookfield Properties, acquired Forever 21 trademarks in 2020. It licensed them to Catalyst Brands, which also operates J.C. Penney, Aeropostale, Lucky Brand, Brooks Brothers, and other retailers. Saks Global and Neiman Marcus, which are merging, also moved last week to close the latter’s headquarters in Dallas, TX along with its flagship store.  

“Between Walmart and Amazon, the ‘specialty’ genre retailers like Party City and Bed Bath & Beyond just couldn’t compete,” a licensing executive said. “If you have a business reliant on these verticals, you will definitely feel the financial impact.”