The Mid-Year Look At Retail 2025

In January, I shared a look at the State of Retail in 2025 and pointed to some continuing headwinds that retailers were facing as well as some bright spots. As we pass the halfway mark of the year, our attention has turned to the uncertainty of tariffs as well as other common struggles. Those facing the most pressure are retailers that have been burdened by debt, find themselves disconnected from their values or messaging, or have inefficient supply chains that cannot keep up with the current economic swings.

There have been more closures, several more bankruptcies announced, and growing evidence of further trouble ahead for several top brands that just cannot seem to catch a break (even from themselves). But it isn’t all bad news. We also see bright spots. There are retailers that continuing their upward trajectory. New stores are opening. And those that invest in their people and processes are showing how much those pay off in the long run.

Let’s take a look at where things stand at the midway point of the year.

Bankruptcies and Closures Continue

At the end of 2024 and in the early part of 2025 there were multiple bankruptcies and liquidations that got underway. We have continued to see that happen. In the first half of the year we have said goodbye to Party City, Joanns, Big Lots (though about half the stores are being run under new ownership), Rite Aid is closing its stores, and Forever 21 is in the process of liquidating their US based stores as well. Walgreens, CVS, and Torrid have all announced significant store closures as part of restructuring (rather than normal store lease expirations, and repositioning.) Most recently, At Home filed for bankruptcy in mid-June. They remain a privately held company, so less is known about the specifics of their situation, but significant debt and sluggish sales are likely the culprits.

Economic Pressures and Uncertainty Persist

The challenges have not lessened this year. It is likely we’ll see additional closures and more bankruptcy filings in the second half of the year, especially if the full effects of pending tariffs come to bear. The entire first half of the year has been filled with uncertainty and mixed messages. Tariffs were on again and paused. Increased, then changed. As of the publishing of this article, the current July 9th deadline for delayed tariffs will have passed and we are likely playing another ‘wait and see’ game.

A recent bright spot was the trade agreement signed with Vietnam. That should help many companies, as Vietnam was already a critical country for sourcing as an alternative to China. I would expect others will accelerate the movement of factories there, but that will take time. There will be delays and shortages that could impact the second half of 2025. Again, we’ll have to see what happens and which retailers have best planned for these contingencies. With big seasons on the line, it could make or break the year for some.

“Retailers that have stuck to their playbook—value, in-stock inventory, strong people practices—are still drawing traffic. As Barron’s summarized after June earnings: ‘Winners like Walmart and TJX are gaining share. Losers are struggling with inconsistent inventory and unclear pricing.’” — Barron’s, June 25, 2025

Back to School, Halloween and Christmas — what to expect

It is a little too early to get a full read on what to expect in the back half of the year and the major retail seasonal events. If you’ve been into a Target recently, you’ve probably seen them beginning their transition into Back To School already. A recent visit I had exposed a lot of empty space and planograms that were ready for product. It seemed like a huge waste of space going into the Fourth of July Weekend, but that just seems to be par for the course right now at Target. Empty shelves and missed opportunities.

The National Retail Federation (NRF) will release their annual report for Back To School (BTS) near the end of July, but early signs seem to point to a similar year as last. In 2024, they predicted about $39 billion in sales, down from a record setting level of more than $42 billion in 2023. This will be the first true test of retailer’s supply chains since BTS is a more time-constrained season than summer. But many retailers likely had their BTS orders in place and possibly even in the US before many of the new tariffs went into place. So we may not feel the effects as much as what follows.

Halloween Halloween is a season that is likely to feel more effects from delayed orders and shipments and could strain many retailers both on margins and product availability. Making this more interesting this year is the absence of Party City, a major destination for both Halloween decor and costumes. Will Spirit be able to pick up the potential left from that opening? With a Friday Halloween, it could be a tremendous opportunity to grab some meaningful comp points for the year for those who can navigate the timing of product and how they manage their distribution points based on tariffs.

“From our data, crafters over‑index on those buying early — so it makes sense for a retailer like Michaels to go all out on the Summerween trend. … Spending growth for occasions is still running way above general spending growth (5.8 % vs. 3.4 %).”

—Neil Saunders, GlobalData Retail

Holiday Finally, the holiday season also presents many risks for retailers. This is a significantly larger season for almost all retailers. The winners will be the ones with the most nimble supply chains and those who were able to maneuver earlier in the year during the tariff ups and downs. Depending on what happens in the coming weeks, that could have a lasting impact on this Holiday season and into 2026.

In all of these seasons, it feels apparent that the common themes will be some increased pricing as even Walmart has announced it cannot absorb all of it. Also, a reduced selection. How much more (on cost) and less (on selection) remains to be seen. Even if shoppers plan to spend the same dollar amount as last year, it could still result in fewer presents under the tree this year.

The Good News

It is not all doom and gloom. There continue to be bright spots. In my earlier article, I highlighted Trader Joe’s, Costco, and Barnes and Noble. All three continue to do well. They remain true to their values and mission, and it is paying off. B&N is probably most insulated from the tariffs and, to a degree, their customer base would likely look to increase reading, as it is a relatively inexpensive way to entertain and engage multiple senses. I was recently in a B&N store, and it was well stocked and a positive experience in every way. It was both a throwback in time, calling back to memories of when they were in their prime in the 90s yet feeling modern and relevant in 2025. It was nice to see.

Many retailers continue to expand. The TJX companies continue to open stores under all of their banners. Five Below has announced they will open up to 150 stores this year and have already completed more than a third of that as of their first quarter earnings announcement. Tractor Supply, Boot Barn, Burlington, and Ulta also have significant new store openings underway for 2025. It will be interesting to see if any plans change as we approach the second quarter earnings season in late July and August. Will any of these pull back to protect cash for the back half? They all have some exposure to consumers tightening their wallets and tariff impacts.

Finally, there have been some intriguing risks taken in the first half of the year. Michael’s may be one of the most compelling. They have purchased the intellectual property (IP) for Joanns Fabrics and are underway with updating their yarn and fabric selections in their stores. Simultaneously, they have jumped all the way into the balloon business vacated by Party City.

Time will tell if the move by Michaels into balloons and Joanns IP will pay off. The Joanns move seems to make perfect sense on the surface, as it fits very cleanly into their crafting DNA. Balloons are a different beast altogether. There is a lot of complexity that goes into that business. I believe several retailers are learning that right now. But Michaels appears to have gone heavy into this based on pictures you see on LinkedIn, banners in their windows, and recent marketing pushes. If both of these pay off, and I believe that is entirely possible, they will be in a strong growth position for the next few years. I am sure that would make private equity firm Apollo very happy.

What do you expect to see in the back half of 2025?

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