Sunday, March 09, 2025

I’ve begun to explore zombie companies—businesses that generate just enough revenue to keep operating and can service their debt but lack enough profitability to invest in growth or fully pay off their obligations. I’m learning that these companies may survive because of favorable economic conditions, like low interest rates.

I see some publicly traded companies labeled as potential zombies because they have persistent financial struggles (many of which trace back to economic disruptions in the COVID-19 era). Some “zombies” are Peloton, Beyond Meat, Carvana, and AMC Entertainment. Their futures are uncertain, however, as restructuring efforts or shifts in market conditions could turn things around.

I work part-time in a retail department store and see firsthand the mounting pressures on the retail sector, from shifting consumer behavior to evolving business needs. Many zombie retail companies might be teetering even more on the edge in today’s volatile political and economic climate.

I often think of this as a chainsaw environment—a ruthless, high-stakes reality shaped by national leadership. It threatens the broader retail industry and deepens consumers’ personal financial anxieties.

This chainsaw environment—defined by high interest rates, tightened credit conditions, and changing consumer habits—poses a grave risk to zombie companies, particularly in retail. While some large retailers survive in times of cheap debt, rising borrowing costs erode their ability to remain afloat.

Tight economic conditions affect everything. They may force a zombie business into bankruptcy, like Bed Bath & Beyond, or force one simply to disappear. Economics certainly influences our personal comfort as consumers.

My retail experience teaches about a brutal industry. A retail company’s survival depends on its adaptability, capital availability, and market confidence. Unless economic conditions shift favorably—or they secure an external bailout—today’s struggling retail businesses may run out of time.

Dear Friends: Witnessing chaos reduces spending, and we worry about our jobs. Diana