The retail sector in 2026 is at a critical inflection point, shaped by a confluence of post pandemic consumer shifts, persistent inflation, high interest rates, and significant debt burdens. While 2025 saw a higher rate of corporate bankruptcies than 2024, with 749 filings by mid of December, 2026 is poised to be a year of reckoning for several iconic retailers. This analysis provides expert predictions on which retailers are most likely to file for bankruptcy in 2026, supported by recent financial data and market trends. The most immediate and high profile risk is Saks Global, the recently merged entity of Saks Fifth Avenue and Neiman Marcus, which is currently in a 30 day grace period following a significant missed interest payment.
The 2026 Retail Landscape: Macro Trends
Several macroeconomic and industry specific trends are creating a high risk environment for retailers in 2026:
- The Luxury Slowdown: After a period of robust growth, the luxury sector is experiencing a significant “spending hangover.” High end consumers are pulling back, and brands are increasingly focusing on direct to consumer (DTC) channels, reducing foot traffic to traditional department stores.
- Debt and Interest Rates: Many retailers are saddled with substantial debt from pre pandemic expansions or leveraged buyouts. The high interest rate environment makes servicing this debt increasingly difficult, as evidenced by the distress at Saks Global.
- Persistent Store Closures: Major retailers like Macy’s and Walgreens are continuing aggressive store closure plans, reflecting a long term shift in consumer behavior away from brick and mortar shopping. UBS predicts that between 40,000 and 50,000 retail stores will close in the next five years .
- Consolidation and its Aftermath: The acquisition of Foot Locker by Dick’s Sporting Goods in September 2025 highlights a trend of consolidation. However, such mergers often come with significant debt and integration challenges, as seen with the Saks Neiman deal.
Top Bankruptcy Predictions for 2026
The following table summarizes the retailers we believe are at the highest risk of filing for bankruptcy protection in 2026, based on current financial indicators and market conditions.
| Retailer | Risk Level | Key Financial Indicator | Primary Headwind |
| Saks Global | Critical | Missed $100M interest payment (Dec 2025) | Luxury demand slowdown; $2.2B merger debt |
| Macy’s | High | Closing 150 stores; 12% closure increase in 2025 | Timid transformation; mall traffic decline |
| Kohl’s | High | Persistent sales decline; activist pressure | Failure to capture younger demographics |
| Walgreens | High | $8.6B net loss in 2024; 1,000+ store closures | Pharmacy reimbursement; theft concerns |
| JCPenney | Moderate High | Post bankruptcy debt; mall traffic decline | Lack of brand relevance; high debt |
| GameStop | Moderate High | Net sales fell 4.5% in Q3 2025 | Shift to digital media |
Detailed Analysis of High Risk Retailers
Saks Global (Saks Fifth Avenue & Neiman Marcus): The 2024 merger was intended to create a luxury powerhouse. Instead, it created a company with a staggering $2.2 billion in debt. As of January 8, 2026, the company is in a 30 day grace period after missing a $100 million interest payment. Key vendors have halted shipments, and the company is reportedly seeking a $1 billion loan to stay afloat. Given the weak luxury demand and the company’s precarious financial position, a Chapter 11 filing in early 2026 is highly probable.
Macy’s: The department store giant continues to struggle with its flagship brand and declining mall traffic. Despite plans to close 150 stores by 2027, the company faces an uphill battle against shifting consumer habits and intense competition from online retailers and off price channels. Its “timid transformation” strategy has yet to yield significant results, leaving it vulnerable in a challenging market.
Kohl’s: Kohl’s has been under pressure from activist investors due to persistent sales declines and a struggle to adapt to the evolving retail landscape. The company has faced challenges in attracting younger demographics and differentiating itself from competitors. While not facing immediate bankruptcy, its long term viability remains questionable without a significant strategic shift.
Walgreens: The pharmacy chain reported a substantial net loss of $8.6 billion in 2024 and plans to close over 1,000 stores. Walgreens is grappling with declining foot traffic, pressures on pharmacy reimbursement rates, and increasing concerns about theft. These factors severely impact profitability and raise questions about the sustainability of its brick and mortar footprint.
JCPenney: Having emerged from bankruptcy previously, JCPenney continues to face an uphill battle. The company is burdened by debt and struggles to regain relevance with consumers. Despite efforts to revitalize its brand, declining mall traffic and fierce competition make its position precarious.
GameStop: The video game retailer is a prime example of a company struggling to adapt to a fundamental shift in its industry. With the increasing dominance of digital game downloads, GameStop’s core business of selling physical media is in decline, leading to falling net sales (down 4.5% in Q3 2025). While it has a loyal customer base, its long term survival hinges on a successful pivot to new revenue streams.
Other Retailers to Watch
- Torrid: The plus size fashion retailer is closing 30% of its locations (approximately 180 stores) due to falling sales, indicating a struggle in a niche market that was once a growth area.
- 7 Eleven: Even convenience retail is not immune. 7 Eleven has experienced declining foot traffic and increased franchisee disputes, with hundreds of locations closing. This suggests that inflation and changing consumer spending habits are impacting even essential retail segments.
- The Container Store: While having emerged from Chapter 11 in January 2025, the home goods sector remains soft. The company will need to demonstrate sustained profitability to avoid further distress.
Conclusion
The retail sector in 2026 will continue to face significant challenges, including evolving consumer preferences, economic pressures, and the ongoing impact of digital transformation. Retailers with high debt loads, outdated business models, or an inability to adapt to these shifts are at the highest risk of bankruptcy.
The immediate situation at Saks Global serves as a stark reminder of the fragility within even the luxury segment. Companies that prioritize financial discipline, innovate their customer experience, and effectively manage their supply chains will be best positioned to navigate this turbulent environment.
