[Editor’s note: This story was originally published February 2018.]
Even after all the tough breaks the market had in December, the recent turnaround suggests maybe things weren’t as dire as they looked. Still there are some companies that could disappear before this year is out.
The sad reality is, some companies are too far gone to salvage no matter how well the economy performs in 2019. Profit margins aren’t necessarily the problem with a lot of these companies. The problem could be the product or service itself or 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.
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 (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 year’s earnings were abysmal 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.
Even though CEO Nick Woodman held out hope for a buyout of GoPro last year, nobody bit. And at this point it doesn’t looks as if anyone will soon. GoPro owners hoping for a generous buyout offer may not want to hold their breath.
Container Store Group (TCS)
The Container Store (NYSE:TCS) still operates more than 80 stores in the U.S. albeit it with much less visibility than it enjoyed several years ago (the last time organization was all the rage).
Between cheaper options online and the move from venues like Bed Bath & Beyond (NASDAQ:BBBY) and home improvement retailers like Home Depot (NYSE:HD) to get deeper into the organizational market, The Container Stores simply became less of a draw.
Even though The Container Store got a 50% bounce in January allegedly thanks to the Marie Kondo show, the marketplace isn’t going to change back to what it once was. CEO Melissa Reiff should recognize it’s better to cash out when there’s still something of value left cash out.
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. Last year CreditRiskMonitor warned that Neiman Marcus’ risk of declaring bankruptcy in 2019 was as high as 50%.
Over the last two weeks the company seems to be attempting to mount a turnaround with the departure of president and marketing director James Gold and hiring talent away from Apple (NASDAQ: AAPL) and Starboard Cruise Services. But whether these moves can save this company is debatable.
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.
Investors who’ve been following the Immunomedics (NASDAQ:IMMU) story for the past several years will know that 2017 was a pivotal year for the company. Sales last year of its oncology diagnostics product LeukoScan were brisk but the FDA denied its request to accelerate approval of Sacituzumab Govitecan.
Moreover, aside from the sale of its revenue-bearing LeukoScan intellectual property, it already has sold royalty rights for Sacituzumab Govitecan to Royalty Pharma.
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.
There’s just not enough money coming in to carry all the weight the company needs carried.
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 just barely was able to emerge from bankruptcy. 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.
The company’s downfall has been predicted many times before. With each passing year, however, Sears (NASDAQ:SHLD) moves closer to the edge of the cliff. This year may be the year it finally falls off.
It recently escaped liquidation by the skin of its teeth when hedge-fund manager Edward Lampert put up $5.3 billion to keep Sears solvent, for now.
But the thing is, Sears hasn’t turned a full-year profit since 2011.
Lampert spent last year breaking Sears into pieces and he’s running out of things to sell as the company continues bleeding income.
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 eleventh-largest grocery store network. In the modern era, however, that 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.
Last year, chatter first surfaced that the company wouldn’t even come close to making the full service payments due on its $1 billion in debt. Increasingly, it looks as if it will fall to Amazon before too long.
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 2020. 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.
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.