6 Brands That May Not Make It Through 2015
Business + Economy

6 Brands That May Not Make It Through 2015


It’s been another banner year for corporate America. Profits after taxes surged to all-time highs — as did the stock market — while familiar names like Facebook, Amazon, Disney and many others have seen strong growth in their brand valuations. In a ranking of top global companies earlier this year by consultancy Interbrand, both Apple and Google topped $100 billion in brand valuation — the first time in the 15-year history of that list that two companies had reached that lofty level. 

Not all companies have fared so well, though. General Motors set an unwelcome record by recalling about 27 million cars and trucks in the U.S. alone, and defective ignition switches in its cars have been linked to at least 42 deaths.

Car sales haven’t suffered, but the stock has lost 15.5 percent on the year. IBM (NYSE:IBM) has struggled to adapt to a changing tech world, leaving Big Blue relatively black and blue. Its shares have fallen nearly 15 percent on the year, the worst performance among the 30 stocks in the Dow Jones Industrial Average. 

Whatever their challenges, GM and IBM at least aren’t in danger of disappearing tomorrow, which is more than might be said for the businesses on the list below. Some of these names are familiar; they appeared on our list last year, too, but have made it through to 2015. As you’ll see, though, we have reasons to doubt whether they can keep going or long. Not that all these brands will simply vanish. Some might get sold, others might undergo name changes for public relations reasons. 

Related: 10 Hottest New Cars of 2015

Radio Shack (NYSE:RSH)
Radio Shack will be studied by future generations of business school students as an example of a company that failed to change with the times. 

The Fort Worth, Texas-based chain used to cater to hobbyists who liked to build their own computers and people who needed specialized parts to repair their home electronics. Radio Shack sold one of the first mass-produced personal computers in the 1970s and ‘80s called the TRS-80. 

The chain lost whatever early mover advantage it had in the PC market. It tried to become the place to buy batteries and the destination for people to get their tablets and smartphones repaired. Neither strategy worked. 

Signs abound that the company is circling the drain. It lost $161 million in the second quarter and posted a 13.4 percent drop in comparable sales. Both Moody’s and Fitch have warned that the company’s cash stake is perilously low. Its market cap is down to just $38 million. 

Related: Was Radio Shack’s Super Bowl Ad Just a Giant Waste of Money? 

A white knight likely won’t be riding to Radio Shack’s rescue. Keeping Radio Shack’s door open will require more than a Christmas miracle. 

American Apparel (NYSE: APP)
The company fired former CEO Dov Charney, who was a magnet for sexual harassment lawsuits and recently told Bloomberg that he was down to his last $100,000 and was sleeping on a friend’s couch. But American Apparel would be in trouble even if Charney had behaved like a Boy Scout. The company, which gained prominence for paying workers far higher wages than its rivals, is in a financial free fall along with other teen brands such as Abercrombie & Fitch (ANF). 

The company has posted net losses of more than $300 million since 2010. Its cash position has plummeted from $16.7 million in March to $9.4 million in September. American Apparel has reportedly received a buyout offer valuing the company at $1.30 to $1.40 per share from Irving Place Capital that would “involve Charney returning to American Apparel in some capacity.”  The shares, though, haven’t reached the offer price, indicating that many on Wall Street are skeptical that it will happen. Another hedge fund has reportedly asked the company’s board to consider “strategic alternatives” like a sale. 

Related: American Apparel Takeover Offer Far Too Low 

Sears Holdings (NASDAQ:SHLD)
Hedge fund tycoon Edward Lampert was smart enough to accumulate a fortune valued at $3.4 billion, but his disastrous tenure at Sears Holdings has proven that he just doesn’t get retail. 

In 2005, Lampert engineered the merger of Sears and Kmart. At the time, he called it a dream deal. Unfortunately, it quickly turned into a nightmare. Since the deal closed, Sears has had only one quarter of same-store sales growth, a key retail metric measuring activity at stores opened at least a year. For a retailer, that is a stunningly bad statistic. 

Related: Sears Posts $548 Million Loss, Doubles Planned Store Closures 

The billionaire, now Sears’ CEO, has spun off assets such as the Land’s End preppy apparel brand, and he propped up the company with loans arranged through his hedge fund. It hasn’t done much good. The stock has fallen 34 percent this year, Sears’ cash position is shrinking and The Wall Street Journal recently reported that vendors tightened their financing terms ahead of the holiday season. 

Sears remains in critical condition with a poor prognosis for recovery. 

Abercrombie & Fitch (NYSE:ANF)
Here’s a sign of just how badly things have gone for this struggling teen-focused retailer: When longtime CEO Mike Jefferies recently announced plans to retire, the share price went up. It’s easy to understand why since under his leadership Abercrombie & Fitch has posted 11 straight quarters of same-store sales declines. Moreover, Jefferies’ peculiar management style has brought the company unwanted media attention for years. 

Under his watch, Abercrombie & Fitch became known for its shirtless male models and Jefferies’ snide insistence that his brand was only for cool people. The CEO also insisted that employees had to follow a stringent “looks policy” that mandated strict grooming standards, including a ban on facial hair. Not surprisingly, this policy generated lawsuits. 

Unfortunately, Jefferies made himself synonymous with a brand that has lost its mojo. The stock has lost 12 percent on the year. Unless the new CEO can find a time machine somewhere, the chain’s days as an independent company may be numbered. 

Martha Stewart Living Omnimedia (NYSE:MSO)
The company was on our list last year — and proved us wrong by making it through the year. 

When Daniel Dienst was named CEO of Martha Stewart Living Omnimedia late in 2013, many on Wall Street were puzzled since he didn’t have a background in media. Then again, his predecessors all did and none of them lasted. 

The corporate turnaround specialist got Wall Street’s attention after he slashed the company’s workforce and decided to outsource most of its publishing business to Meredith under a 10-year agreement. The Meredith move is expected to boost operating income by $10 million to $15 million annually. Shares of Martha Stewart Living surged 22 percent on the news. It’s up 4 percent on the year. 

Related: Can Martha Stewart Refurbish Her Brand and Business? 

Unfortunately, Martha Stewart Living’s merchandising business also is struggling, having lost $1.54 million in the last quarter because of an $11.4 million write-down of its Emerill Lagasse merchandise. 

Despite the progress, keeping the Martha Stewart brand relevant remains a tall task. Look for more big changes, like a sale, in 2015. 

Malaysia Airlines
Considered one of the world’s top airline brands just a couple of years ago, Malaysia Airlines was already teetering on the brink of financial disaster even before Flight 370 mysteriously disappeared and Flight 17 was downed in an area of the Ukraine controlled by Russian separatists. 

The only reason the airline continues to operate is that Malaysia’s state-run investment fund is keeping it aloft, pumping $1.73 billion into the company, which has cut 6,000 jobs as it tries to pare costs and prepare for launching as a new company in July 2015. 

Related: Malaysia Airlines Flight 370 — Four Wild Theories 

Still, trying to assure travelers that its planes are safe after two of its flights met with tragic ends is no easy feat. Malaysia’s government has picked Aer Lingus CEO Cristoph Mueller to be the next CEO of the airline. He is due to take the job in the middle of the next year and one of the first things he’s going to need to do is find a new name for the airline. 

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