[Editor’s note: This story was originally published February 2018.]
Even with all of the markets’ gyrations this year, there are still plenty of quality stocks to own with several catalysts. Energy stocks are turning it around, pot stocks are just getting started and plenty of bargains are popping up in the tech sector.
Yet, the sad reality is, some companies are too far gone to salvage now, even if the economy doesn’t slow down in 2019. Profit margins aren’t necessarily the problem. The problem is the product or service itself — or in some cases a horrible reputation that would-be customers just can’t shrug off.
With that as the backdrop, here are the eight major companies most likely to pull a vanishing act in 2019. These are companies that could disappear either completely or just in their current form. Their brand names may survive, but the operations themselves simply aren’t viable enough.
Here are the eight companies that could disappear in 2019:
8 Companies That Could Disappear in 2019: GoPro Inc (GPRO)
Just to be clear, you’ll likely find GoPro-branded action cameras on store shelves for many years to come. In the same sense Xerox and Google transcended company names and became verbs, GoPro Inc (NASDAQ:GPRO) has successfully become synonymous with action cameras. GoPro is — and will remain — the standard-bearer for its respective market. That market, however, has been surprisingly small, with no real barrier to entry.
The end result? Last quarter’s top line was down 38% year-over-year, and revenue was flat for the full year. The company is still booking heavy losses too, unable to find or develop a product more consumers just have to have.
Between its beleaguered past and a grim future, CEO Nick Woodman finally conceded that it is opening to selling or partnering with another company in order to “help GoPro shine.”Nobody’s jumped at the chance to make a bid on GoPro yet, so GPRO owners hoping for a generous buyout offer may not want to hold their breath.
8 Companies That Could Disappear in 2019: Container Store Group Inc (TCS)
The Container Store Group Inc (NYSE:TCS) still operates more than 80 stores in the U.S. — albeit it with much less visibility than it enjoyed several years ago when organization was all the rage.
Between cheaper options online and the move from venues like Bed Bath & Beyond Inc. (NASDAQ:BBBY) and home improvement retailers like Home Depot Inc (NYSE:HD) to get deeper into the organizational market, The Container Stores simply became less of a draw.
Last quarter’s sales were up 3.1% — but that was short of analyst estimates. And with income down just a bit along with a 0.2% decline in same-store sales despite robust retail spending late last year, the writing is on the wall. The marketplace isn’t going to change back to what it once was, and the organization has already begun to try and shrink its way to success. CEO Melissa Reiff should recognize it’s better to cash out (somehow) when there’s still something of value left cash out.
8 Companies That Could Disappear in 2019: Neiman Marcus
Neiman Marcus is not a publicly-traded company, but a noteworthy name to investors all the same. The struggles that the department store chain faces are applicable to other similar chains. CreditRiskMonitor warned in January that Neiman Marcus’ risk of declaring bankruptcy in 2019 was as high as 50%.
Yes, the company’s sales for the quarter ending in October of last year were up for the first time in a long time. But earnings were still lower on a year-over-year basis. And the company had to pull out all the stops and spend heavily to induce that revenue growth. The math just doesn’t work unless the company can sell more merchandise to more customers at higher prices. Something’s got to give sooner or later, and sooner rather than later.
8 Companies That Could Disappear in 2019: Immunomedics, Inc. (IMMU)
Investors who’ve been following the Immunomedics, Inc. (NASDAQ:IMMU) story for the past several years will know that 2017 was a pivotal year for the company. In the very near term, things look good. Sales of its oncology diagnostics product LeukoScan have taken off as it continues to develop its flagship product, Sacituzumab Govitecan — currently in Phase 2 trials — and push forward with the development of Epratuzumab, presently in Phase 3 testing.
If you read between the lines and study the long-term case, you see that Immunomedics realizes it’s running out of money at a pretty quick clip. In fact, the company intends to sell its LeukoScan franchise to help fund the development of the more promising opportunities in that pipeline.
Aside from the sale of its revenue-bearing LeukoScan intellectual property, it’s already sold royalty rights for Sacituzumab Govitecan to Royalty Pharma.
The company has $97 million in liabilities related to the conversion of debt to shares last year, another $20 million in convertible notes and a quarterly cash burn of $30 million. Clearly, some sort of restructuring, partnership or big fund-raiser for the company is needed.
There’s just not enough money coming in to carry all the weight the company needs carried.
8 Companies That Could Disappear in 2019: Remington
Remington is another privately-held company that investors may want to keep close tabs on, as what’s happening to it could apply to rivals like Sturm Ruger & Company Inc (NYSE:RGR).
The firearm manufacturer has already filed for bankruptcy. That filing was made on Monday morning. Remington worked with its creditors so it could continue operating while going through the bankruptcy process.
This may be a case, however, where restructuring and more time don’t solve the true, underlying problem. That is that consumers just don’t want the guns Remington is making.
Remington was sued over the 2012 Sandy Hook shooting, and many investors have distanced themselves since. This, along with potential for stricter gun laws in the foreseeable future, means there may not be any growth in Remington’s futures.
8 Companies That Could Disappear in 2019: Sears Holdings Corp (SHLD)
The company’s downfall has been predicted many times before. With each passing year, however, Sears Holdings Corp (NASDAQ:SHLD) moves closer to the edge of the cliff. This year may be the year it finally falls off.
In its third fiscal quarter last year, Sears (which also owns Kmart) booked its 24th consecutive year-over-year decline in sales… and that’s not even the worst part.
The $558 million loss it suffered for the quarter is still not the worst part.
What is the worst part: despite years of store closures that were supposed to cull the dead weight from the herd, Q3’s same-store sales still managed to fall a whopping 17% for Sears, and fall 13% at Kmart.
What gives? In simplest terms, hedge-fund-manager-turned-retail-CEO Eddie Lampert thought he could turn the company around,but he couldn’t. Instead, he’s continued to chop off revenue-bearing pieces of the company while mismanaging the remaining components. Now there’s little left of the company to do anything with — save perhaps the name itself.
8 Companies That Could Disappear in 2019: Southeastern Grocers
You’ve probably not heard of Southeastern Grocers. That’s because, aside from not being a publicly-traded entity, it doesn’t do business under its corporate name. You’ve probably heard of its stores though, particularly if you’re from the south. It’s the owner of BI-LO, Harveys, Winn-Dixie and Fresco y Mas grocery stores, some of which have been around for eons.
Right now, Southeastern Grocers is the nation’s fifth-largest grocery store network. In the modern era, however, being the fifth largest operator isn’t a whole lot better than being the fiftieth largest. It’s business that relies on scale, and lots of it. Kroger Co (NYSE:KR) and Amazon.com, Inc. (NASDAQ:AMZN) have it. Southeastern Grocers doesn’t.
In November, chatter first surfaced that the company wouldn’t even come close to making the full service payments due on its $1 billion in debt. While nothing has come of that threat yet, the fact that the discussion is making the rounds at all bodes poorly.
8 Companies That Could Disappear in 2019: Fitbit Inc (FIT)
Last but not least, add Fitbit Inc (NYSE:FIT) to your list of companies that won’t be around as you know and love them today.
Like GoPro and Sears, you can reasonably expect consumer technology with the Fitbit name on them to still be in stores come 2019. The organization has worked hard to develop the brand into the name people think of when they think of wearables. Much like GoPro though, this is a company that thought its wares were far more marketable then they actually were.
Stifel Nicolaus analyst Jim Duffy summed up the situation in December, explaining:
“Exiting 2017, innovation has failed to both unlock any meaningful healthcare business opportunities and inspire meaningful new consumer interest in the category. Fitbit’s $1.6 bn consumer electronics hardware franchise is likely to remain unprofitable unless 1) new product adoption is sufficient to more than offset waning demand for fitness trackers, or 2) expenses are drastically reduced to align with the size of the business. Exiting 2017, there is no visibility to either lever for profitability.”
Duffy has upgraded FIT stock to a “Hold” in the meantime, but that’s got more to do with the stock’s prospects than the company’s prospects.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.