U.S. Retail Bankruptcies Mean Increased Profit for These 5 Stocks (According to UBS)
In recent years, retail bankruptcies in the United States have seen a significant increase, a trend that has continued into 2025 with Rite Aid and Claire's joining the ranks of struggling retail chains. This development, according to analysts at UBS Bank, could benefit a select group of consumer stocks.
Two retail chains, Rite Aid and Claire's, have filed for bankruptcy this year, leaving a trail of store closures in their wake. Rite Aid, the pharmacy and retail giant, is planning to close 900 stores, while Claire's, the accessories and jewellery retailer, is giving up 300 stores as part of its bankruptcy proceedings.
The closures of these stores could potentially benefit retail giants like Walmart, Dollar Tree, and Dollar General, which UBS analysts believe are well-positioned in the current market. Walmart, in particular, has a 58% and 53% location overlap with Rite Aid and Claire's stores, respectively. This means that a significant number of Walmart stores are located near the stores that are closing, potentially attracting customers displaced by the closures.
Analysts predict that Walmart is likely to benefit the most from Rite Aid's closures due to its investments in the pharmacy and pharmaceutical industry. Similarly, Dollar Tree and Dollar General, known for their affordability, could also see an increase in customers as they have 87% and 67% of their stores within a 10-minute and 5-minute distance from Rite Aid and Claire's stores, respectively.
The year-to-date stock performance reflects this potential for growth. Walmart's stock performance stands at +15%, Dollar Tree's at +28%, and Dollar General's at +41%. Even Costco, although not directly benefiting from the closures, has seen a +5% year-to-date stock performance.
Companies like Aldi USA and discount retailers such as TK Maxx, which benefit from the US retail chain closures since 2024, are expanding aggressively and attracting price-sensitive customers returning to brick-and-mortar specialty stores focused on experience and value. Additionally, firms leveraging algorithmic trading technologies in the stock market also gain from market shifts by reducing costs and optimising trades through automated solutions.
Retail chains are particularly vulnerable to the ongoing trend towards e-commerce, import-related tariff increases, and the growing consumption behaviour gap between high- and low-income households. This trend towards store closures is expected to continue, with UBS analysts predicting that the number of stores closed in the U.S. between 2024 and 2029 will reach 40,000.
In conclusion, the retail landscape in the U.S. is undergoing a significant shift as store closures mount, and analysts are identifying specific retail stocks that they believe are most likely to benefit from this trend.
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