Retail ended 2025 on a surprising high note, closing the year up 4.2% to $6.4 trillion, with December’s $626.6 billion rising 4% year-over-year, excluding motor vehicles and gasoline. Yet the headlines rang alarm bells going into 2026. The Wall Street Journal reported, “U.S. Retail Sales Unexpectedly Flat in December,” highlighting economists’ concerns about a fragile consumer economy. 

Those worries intensified with a string of retail bankruptcies early in the year, including Saks Global, Francesca’s, the retail operator of Eddie Bauer’s 180 stores and FAT Brands, which holds 18 restaurant chains, including Ponderosa and Bonanza Steakhouses, Elevation Burger, Fatburger, Johnny Rockets and Fazoli’s.

However, the reported December flat retail sales were based on seasonally-adjusted numbers, a “highly misleading and inaccurate way of assessing performance,” stated GlobalData’s Neil Saunders, who noted that December 2025 actually posted its highest level of overall retail growth since 2022. 

Government data also lags real-time bankruptcy announcements, and on the bankruptcy front, retail bankruptcies year-to-date are roughly in line with 2025. Last year, Coresight Research tracked a total of 32 retail bankruptcies, far below the 50 reported in 2024.  

In other words, retail is entering 2026 stronger than the headlines suggest. The National Retail Federation just reported “a moderate monthly increase and strong year-over-year gains in January,” even given ongoing consumer worries about inflation and affordability.

Despite A Strong Economy, Bankruptcies Are Inevitable

Bankruptcies will surely occur in 2026, as predictably as day follows night, but they will reflect company-specific weaknesses rather than the prospects of the retail sector overall. 

Even against a backdrop of continued strong consumer spending, some retailers are weighed down by too much debt, weak cash flow or business models out of sync with changing consumer expectations, giving more agile competitors an advantage.

RapidRatings, which measures corporate financial health, has compiled a watch list of retailers most at risk of failing this year based upon two critical metrics ranging from 0 to 100 points: 

• Financial Health Rating (FHR), the key predictive measure of a company’s financial stability to survive over the next 12 months
• Core Health Score (CHS), a medium-term measure of a company’s financial health independent of short-term shocks 

An FHR and CHS of 40 or less are high risk—ratings of 20 or below are very high risk—and the major retailers that went under in 2025, such as Rite Aid, Joann, Big Lots, LL Flooring, Express and Container Store, had an average 26 FHR and 31 CHS. 

High-Risk Retailers

Here are six major retailers that fall into the high-risk category. None of these companies responded to a request for comment:

Children’s Place (FHR 19/CHS 31)

Children’s Place is undergoing a rebrand, introducing a “It’s a Yes Day” platform that puts kids in the driver’s seat when it comes to fashion. This follows a November revamp of the brand’s loyalty program and a $450 million loan refinancing to increase its borrowing limit. 

Nonetheless, the outlook doesn’t look promising for the nearly 500-store chain, which plans to open 15 to 20 new stores in the first half of fiscal 2026. Revenues across its portfolio, including Children’s Place, Gymboree, Sugar & Spade and PJ Place, fell 13% in the third quarter of 2025, ending November 1, to $340 million, and were off 10% year-to-date at $880 million, compared to $978 million the previous year.

On a side note, another major kids’ clothing retailer, Carter’s and its OshKosh B’gosh brand, is taking a different tack to address many of the same challenges facing Children’s Place. It will close 150 of its 1,200 stores, pause new store openings and reduce workforce by 300.

Carter’s ended with third quarter revenues flat over previous year at $758 million and through the first three quarters, revenues are down 1% to $1.97 billion. In a preliminary update on fiscal 2025, fourth-quarter revenues are expected to rise in the high single digits, with full-year sales up in the low single digits. It ended fiscal 2024 at $2.8 billion. 

QVC (FHR 21/CHS 23)

QVC stock dropped 30% immediately after Bloomberg reported that the television shopping channel is in confidential talks to restructure debt through a potential Chapter 11 bankruptcy. 

Amidst viewership decline in its cable shopping channels, including QVC and HSN, a 7% decline in units shipped and reduced shipping and handling revenues, third quarter group revenues dropped 6% to $2.2 billion and operating income was off 62% to $60 million—the most alarming indicator of its weakening financial position. It’s holding nearly $6 billion in debt against $1.8 billion in cash and equivalents. QVC will report year-end on February 26. 

Marley Spoon (FHR 26/CHS 35)

Luxembourg-based global meal kit company, Marley Spoon, has figuratively jumped from the frying pan into the fire where revenues are concerned—down nearly 20% to $165 million (€139 million) through first half of fiscal 2025 and off 26% in the most recent quarter to $76 million (€64 million). The company is taking steps to regain its footing by increasing engagement with existing customers while reducing its marketing investment to attract new ones.

Despite reporting that average order frequency was up by more than 5% and average order value increased by nearly 6% in the most recent quarter, it’s hard to see where growth will come from if the new customer funnel narrows. 

Through the first half, active customers are down 26% year-over-year, and active subscribers are off nearly 20%, with a comparable reduction in the number of orders and meals delivered. The U.S. and Australia account for over 90% of Marley Spoon’s revenues in the most recent quarter—53% and 38%, respectively.

 Walgreens (FHR 27/CHS 32)

Walgreens, the drugstore industry’s number two chain behind CVS, faced the same competitive and structural challenges that forced number three Rite Aid into bankruptcy in 2025.

Only Walgreens got a reprieve after being taken private by Sycamore Partners in a $10 billion deal last year, yet its financial health remains challenged. At the time of Rite Aid’s filing, it had the same CHS score as Walgreens does now, though its FHR was 16 in the very high-risk category, compared to Walgreens’ current high-risk rating. 

Walgreens continues with its original 2024 plan to close 1,200 of its then 8,500 stores over three years, but CVS appears to be benefiting more from these and Rite Aid’s closures, with fiscal 2025 year-end pharmacy segment revenues increased 12% to $139 billion and same-store prescription volume up 8%. 

However, the Private Equity Stakeholder Project advises that Walgreens’ future under Sycamore is no guarantee of success. It reported that private equity firms were behind seven of the eight largest healthcare bankruptcies in 2024 and suggests that the typical PE playbook may jeopardize patient care and ultimately increase bankruptcy risk.

Red Robin (FHR 27/CHS 26)

While the casual dining segment appears to be holding its own in the highly competitive $1.2 trillion retail food service industry, up 5% last year, some retailers, like Texas Roadhouse, Chili’s and Longhorn Steakhouse, are doing better than others, like FAT Brands that filed in January. Red Robin is another one struggling to compete. It operates 390 company-owned restaurants—after closing 17 this year— and 90 franchised.  

Third quarter 2025 revenues were down 3.5% to $265 million, and the company expects fourth quarter revenues to decline at about the same rate. Net income loss in the quarter was $18.4 million, an improvement over the $18.9 million previous year. At the end of third quarter, it was holding $172 million in long-term debt. Red Robin will report year-end on February 25. 

Sportsman’s Warehouse (FHR 28/CHS 27)

Bankruptcy rumors began to swirl around Sportsman’s Warehouse in early 2025 after it closed fiscal 2024 in a weakened position with net sales down 7% to $1.2 billion, same store sales off 8% and a net loss of $33 million. It seemed to be rapidly losing ground to privately held Bass Pro Shops and Cabela’s, which joined forces in 2017. 

However, by the end of 2025, Sportsman’s Warehouse—with 146 stores compared with some 127 Bass Pro Shops and 60-odd Cabela’s—had made progress in its turnaround plan. Revenues through the third quarter ended November 1 increased 2% to $857 million, and same-store sales were up by the same amount. Yet, it reported a net loss of $28 million and $180 million in debt. 

While the company’s topline has improved, its financial health scores remain in the same high-risk category as a year ago.

Other High-Risk Retailers

A number of other retailers are also on RapidRatings high-risk list, including DTC home furnishings retailer Wayfair (FHR 27/CHS 35), fashion retailer ASOS (FHR 31/CHS 36), AMC theatres (FHR 32/ CHS 27), family clothing retailer Tillys (FHR 36/CHS 33), women’s fashion brand Cato (FHR 37/CHS 30) and shoe company Allbirds (FHR 38/CHS 20).

Smaller Retailers At Higher Risk

RapidRatings executive chairman James Gellert says it’s too early to call whether 2026 retail bankruptcies will match or exceed last year’s lower filing levels, but he notes that over 90% of bankruptcies occur among companies that have an FHR score of 40 or below. And larger companies generally are better able to stay out of the high-risk category. 

“What we are seeing in retail is consistent with a lot of other industries. A larger-sized company is able to plod through or even improve during more volatile economic times, where the smaller companies are being disproportionately hit,” he shared.

Across industries, what gets companies into trouble is high debt or failing to respond effectively to a fundamental shift in the market. Retailers are particularly vulnerable to the later, since consumer needs and wants shift rapidly as do their shopping habits. In that case, Gellert warns, “Just fixing the capital structure may not be enough to be a long-term solution.”