DISTRESSED DAILY: Retail Shakeout Fears Reemerge as Stress Grows

After a shakeout early in the pandemic, financial distress in the retail industry eased as businesses reopened and consumers rushed to spend. Now leverage, inflation and supply-chain problems are threatening to shatter that uneasy calm.

“There’s a lot of potential stress in the sector,” said George Koutsonicolis, managing director of restructuring and distressed asset support services at SOLIC Capital Advisors.

Retail “is a tale of two cities,” Koutsonicolis said in an interview, pointing to a gap between companies that refinanced during the pandemic and made needed investments and those that didn’t. Even though Americans splurged when stimulus checks rolled ...