Right now, apparel companies are at the front of the retail bankruptcy parade. According to Hedgeye Retail analyst Brian McGough, it is likely to continue and will ultimately trigger an apparel depression.
As McGough explains in the clip above, after years of downward pressure on price, and a growing reliance on imports, retail apparel companies are in (deep) trouble unless they start slashing square footage.
“You’ve got 20% to 40% of apparel square footage that has to go away over a five-year period, just to maintain the horrible economics that we’re living with right now,” McGough explains.
“We’re not going to see that many stores go away. So, that means the pressure is going to intensify, margins are going to go down, and there’s going to be a lot more shorts than longs now.”
Watch the full clip above for more.