We all make bad decisions. These companies wasted millions because of their bad decisions.
Read on for some insane bankruptcy – and almost-bankruptcy – stories that will hopefully help to inform your decision-making process, especially when it comes to your career.
JCPenney has been through its fair share of ebbs and flows as a business over the years. It has gone in and out of appliance sales, ended a widely popular catalog subscription, rebranded and updated its stores, and even filed for bankruptcy. But even before bankruptcy, JCPenney was in trouble … because of the American public’s lack of common sense.
In 2012, the stores announced that they were no longer going to price things absurdly high and then mark them down repeatedly for people to feel like they were getting a deal.
As most of us know, department stores put things on the floor at absurdly high prices, and you often aren’t buying an item for what it’s worth until it has been discounted multiple times. JCPenney chose to list its items at more fair prices.
But because they stopped putting discount stickers on everything — Why would they, when the vase that they would have originally marked as $20 was marked at its fair price of $10 already? — the American public thought they were no longer getting a deal. Sales came to a screeching halt, and JCPenney had to rethink its moment of truth.
David’s Bridal hasn’t always had success when it comes to revenue. Soft pink, 1980s-inspired-decor might lend to its losses, but we are willing to bet that all of the promotions, discounts, and sales may be at fault, as well.
After a leveraged buyout in 2012, the company struggled to make ends meet with over 300 franchises across North America. The wedding gown company filed for bankruptcy in November 2018, after in-store losses accumulated an insane amount of debt. Between its November 2018 filing and January 2019, they shrank their debt by millions, emerged from bankruptcy, and made a couple of hefty investments that look to be suiting their brand these days. Even with the pandemic lurking, they haven’t faced financial fluster as of late.
This was a short-lived beauty of an app that truly benefited its customers. A subscription-based ticketing service for movies, it clunkily launched in 2011 and was developed into an app shortly thereafter for user experience reasons. For a monthly fee, MoviePass allowed each subscriber to redeem three movie tickets. Over time, new plan structures evolved, each confirming more and more benefits for the user.
That is, until the unlimited options gave way to financial loss, as users went to more and more movies on MoviePass’ dime. Competitors like AMC were updating their rewards programs at record speed, also pricing out some of the lucrative options for users. In 2018, long before the pandemic threw movie attendance into disarray, MoviePass ran a deficit of millions and never recovered. By Jan. 28, 2020, MoviePass was no longer in operation.
Speaking of entertainment, Blockbuster’s bankruptcy may have hit ’90s kids the hardest. The yellow and blue logo undoubtedly directly inspired the advancements in entertainment technology that led to its demise.
Blockbuster’s short-lived subscription service and updated rental options couldn’t compete with newly developed applications and other technological advancements, so it folded in 2014. There is one remaining location, in Bend, Oregon.
Though the company — under BuzzFeed as of February — has yet to technically go bankrupt, its propensity to lay off staffers is widely side-eyed in the industry. And with the recent acquisition from Verizon Media Group, BuzzFeed chose to lay off 70 more staffers just this March.
The restructure comes from over $20 million in losses by HuffPost last year, which inspired a 30% reduction in U.S. staff and the cutting off of the Canada offices altogether.
Just for Feet
After 27 years, Just for Feet filed for Chapter 11 and was sold off in 2000 before closing its doors for good in 2004. Just seven years prior, it had been hailed as one of America’s fastest growing companies by Fortune magazine. In 1999, however, they aired a Super Bowl ad that was both racially and culturally insensitive. They never recovered.
An early user of Amazon for online sales, Borders effectively put itself into bankruptcy. The company’s stakeholders all had different visions for where the industry was heading, they didn’t latch onto their own digital model – e-readers, apps, or online purchasing — and all of their options went out the window when they were surpassed by their competitors. After all, from 2001 to 2008, they basically helped build Amazon’s book sales section. That — coupled with the drop-off in music and movie sales due to subscriptions, apps, and other modes of consumption — led to Borders closing its doors and handing over its assets to Barnes & Noble in 2011.
Hailed as one of the most popular department stores of the 1980s and 1990s, Mervyn’s was once a West Coast empire. With over 300 stores in 16 states, it was such a cultural institution that you couldn’t spot a pair of khakis or a floral dress without nodding with knowing admiration, murmuring, “Mervyn’s.”
But then Mervin Morris, the founder of the 60-year project, sold the stores off to Dayton Hudson, who mismanaged the chain. This led to a declaration of bankruptcy in 2008, with all storefronts empty by the following year.
In 2003, Red Lobster ran an extravagant promotion that eventually landed them in bankruptcy. That year, they enticed customers to come in and enjoy an all-you-can-eat snow crab experience for the low cost of $20.
The problem? Snow crab is more on the expensive side of things. It’s no wonder why, as the Discovery Channel’s “Deadliest Catch” followed crab fishermen into dangerous seas to procure king and snow crab. Snow crab fishing is also highly regulated by the government, so only so much is allowed to be pulled from the oceans per year. These delicacies are obtained under harsh conditions and are hailed as some of the best seafood in the world.
While snow crab was under $5 per pound at the time — it is since much closer to $6, and fluctuates depending on availability — the restaurant underestimated consumers’ abilities to consume. Diners came in and ate and ate and ate. In fact, they ate so much that the promotion cost Red Lobster over $1.1 million per month in a very short window of time.
The Kansas City, Missouri, beauty supplier filed for Chapter 11 bankruptcy in January 2019. While it cited its mostly brick-and-mortar sales as part of the issue, a few glitches in restructuring seemed to have helped drive the final nail in the coffin.
Between 2014 and 2016, the company opened 11 new stores with an updated concept model, spending money hand over foot where it didn’t exist. The focus on the new store model made the company neglect their existing stores, which was an issue for consumers.
The company was sold off and continues to operate on a smaller scale alongside beauty giants Ulta and Sephora.
Remember Photobucket? Before CVS and Walgreens had interfaces to store photos online, and before the invention of Google Suite or the optimization of the cloud, Photobucket was one of the top places to store photos online. Founded in 2003, it helped users to store and share photos and videos and was widely used during the blog boom of the aughts. Its stories option launched in 2012 may have even inspired the “stories” concept widely used by Facebook and Instagram.
Then, on June 30, 2017, Photobucket made subscriptions mandatory for all users, meaning the site went from costing $0 per year to $399 per year overnight. Users quickly fled from the platform and found other places to host and share their photos.
Since then, the pricing structure has fluctuated to try and keep up with demand. Though they haven’t officially gone bankrupt, Photobucket is no longer considered the top technology for media creation, editing, sharing, or storing.
We all remember them: the listening parties and CD signings of the ’90s and aughts, the hours of endless fun in our favorite music megastores. But by 2005, they were only open thanks to loans, as the Virgin name had lost over $340 million in its previous two years.
While they didn’t sell off their assets for profit early enough to invest in or benefit from the streaming and downloading platforms of the time, the Virgin name is now associated with the elaborate 10-minute trips into the “outer space” of 2021.
Steve & Barry’s
Remember when you could buy a hoodie for $10? Or a really fun long sleeve shirt for your dad for $7? Steve & Barry’s was the casual and sports clothing retailer that made discount shopping great for the whole family.
But its prices? They priced it out entirely. After 24 years, they filed for bankruptcy in 2008. The company liquidated and shuttered its 173 stores by 2009.
Circuit City went the way many brick-and-mortar retailers are going now, just a little over a decade in advance. Horrifying mismanagement in 2007 led to the company laying off many of its more experienced and well-compensated employees to cut costs. They brought in a less-experienced staff that was unable to manage storefronts, educate the public, or keep customers happy. On Nov. 10, 2008, they filed for Chapter 11 bankruptcy and closed 155 stores.
While A&W has never technically filed for bankruptcy, they are few and far between these days. The fast-food chain suffered a major loss in the 1980s because it ran a special promotion consumers simply didn’t understand.
A&W created a third-pound burger to compete with McDonald’s popular quarter pounder and offered it at the same price. But even with a special promotion, the burger wasn’t selling, a fact that was absolutely flummoxing to the company.
A focus group confirmed the worst: Americans have no common sense. Because the number three is smaller than the number four, consumers thought they were getting a smaller burger when, in fact, the meal at A&W had more meat.