By Russ and Tiña De Maris
It’s been a tough year in the retail industry. Some 7,000 stores have closed, and 16 major companies have filed for bankruptcy. And the year isn’t over. What are the chances of a company going bust? That’s a big question among investors and, sure enough, there are companies that make their bread by calculating such risks.
Internet news publisher retaildive.com recently published findings from one of those companies, CreditRiskMonitoring, who produces a metric called a FRISK score that figures out the risk of a given company filing for bankruptcy in the next 12 months. On the list of “Retailers with a high chance of bankruptcy” is Camping World. It’s not a long list – only 12 other retailers occupy that ignominious roll, including the likes of J.C. Penney and Neiman Marcus. How “likely” is bankruptcy, according to CreditRiskMonitoring? The firm places Camping World on the list of a likelihood of chances between 9.99 percent and 50 percent.
Just how reliable is a FRISK score? According to FRISK’s parent, CreditRiskMonitoring, their score has “been proven 96% effective in predicting public company bankruptcies.” The metric is based on a variety of factors including credit ratings, financial ratios, credit analysis and other data the company compiles.
There have been rumors of Camping World teetering on the edge of financial ruin for some time. But as journalist Ernest Hamlin Abbott wrote, “Rumors are not news; but they sometimes foreshadow news.” The FRISK score may well be more than a rumor. Tomorrow’s news, itself, will tell.