These were just some of the companies that fell victim to the retail apocalypse.
One of the first retailers to declare bankruptcy this year was women’s clothing chain The Limited, which shut down all 250 of its stores in January and filed for bankruptcy a week later. Like other mall-based retailers, The Limited struggled with declining traffic and a saturated apparel retail industry. However, like hh gregg, the Limited reemerged as an online-only clothier in October after private-equity firm Sycamore Partners acquired its intellectual property for $26.75 million.
On the heels of The Limited’s bankruptcy, rival Wet Seal followed suit in February with its own bankruptcy declaration. After closing all of its stores, Wet Seal filed for bankruptcy for the second time — the first was in 2015, when the company said it was unable to find a buyer. Declining mall traffic also proved to be a death blow for Wet Seal; it’s one of many chains to be driven out of business as shopping patterns have changed. Like The Limited, Wet Seal has also reemerged as an online-only brand since having its assets acquired by Gordon Brothers in a bankruptcy auction.
In one of the biggest bankruptcies this year, discount footwear chain Payless ShoeSource filed for Chapter 11 in April, saying it would shut down 400 stores out of a total of more than 4,400 around the world. The news wasn’t exactly a surprise: Moody’s had downgraded its outlook on the company to “negative,” citing upcoming loan payments.
Like Toys “R” Us, Payless suffered from a 2012 leveraged buyout by private equity firms. By the end of the summer, the company said it had closed 900 stores, and came out of bankruptcy after slashing its debt burden by about $400 million.
After closing 120 stores in January, BCBG Max Azria kicked the bucket in May. The company succumbed to the same forces that pressured The Limited and Wet Seal. The fashion label was acquired by Marquee Brands in August for $108 million. Marquee, a diversified fashion group, owns brands such as Bruno Magli, Ben Sherman, and Body Glove. Marquee said it would expand BCBG’s presence through “monobrand boutiques, shop-in-shops, department stores, and e-commerce.”
Midwestern department-store chain Gordman’s filed for bankruptcy in March with plans to liquidate its assets and inventory. The chain operated 100 stores in 22 states, and faced similar pressures to other department store chains: Sears, J.C. Penney, and Macy’s have each closed at least a dozen stores this year, and nearly every department store chain is downsizing. Hudson’s Bay sold the Lord & Taylor flagship to WeWork, and Lord & Taylor will now occupy just a quarter of its previous footprint.
Gordman’s ended up selling 50 locations to Stage Stores, another struggling department store chain, and shuttered the remainder of its stores. Unsecured creditors ended up getting just $0.05 to $0.11 on the dollar.
Denim retailer True Religion called it quits in July, filing for bankruptcy and saying it had $534 million in liabilities but just $243 million in assets. However, the company also said it had secured a deal with creditors to relieve it of $350 million in debt in exchange for significant equity stakes in the company. Like other fashion brands, the once-popular luxury denim maker fell out of style amid the rise of athleisure.
The company successfully came out of bankruptcy at the end of October with a plan that not only reduced debt but extended its payback date to 2022.
Yet another apparel retailer makes the list. Teen-focused Rue21 filed for bankruptcy in May as it negotiated debt reductions with creditors. At the time, Rue21 had plans to close 400 stores out of about 1,100 it had open at the time. Like other teen and mall-based retailers, Rue21 struggled with a glut of competition and declining mall traffic.
In September the company came out of bankruptcy with 420 fewer stores and an improved capital structure with a $125 million credit facility. Rue21 also posted better-than-expected results in its second-quarter report.
Sporting goods and outdoor equipment retailer Gander Mountain filed for bankruptcy in March, saying it would close all 126 locations. In May, Camping World (NYSE:CWH) won the auction to take over the company’s assets for $390 million.
Like other sporting goods retailers that have declared bankruptcy recently, including Sports Authority, City Sports, and Vestis Retail Group, Gander Mountain, the parent of Bob’s Stores and Eastern Mountain Stores, struggled to adapt to the rise of e-commerce, though it said it still had a core group of profitable stores. Camping World said it would reopen 57 Gander Mountain stores.
Women’s shoe retailer Aerosoles filed for Chapter 11 in September, citing declining mall traffic and widespread promotions across the industry as footwear retailers across the board have struggled to adapt to market changes. The company said it would close all but four of its 78 stores, keeping flagships in New York and New Jersey open. The footwear retailer said it had received two proposals from potential investors, but had rejected both of them. However, it is still holding talks on a possible deal.
The nutritional supplement sector has also gotten hammered recently, and shares of GNC and Vitamin Shoppe have tumbled in recent years. Privately held Vitamin World was unable to escape the misery, filing for Chapter 11 bankruptcy in September. Management said it was hoping to get out of expensive leases, and that it was in the middle of negotiating with landlords.
Pressure from the e-commerce channel as well as a move by its former parent company to tighten quality control standards in response to regulators seemed to doom the company.
Finally, perfume retailer Perfumania Holdings filed for bankruptcy in August, saying it planned to close 64 of its 226 stores and that it would renegotiate its remaining leases. In October the company emerged as a privately held enterprise, paying off shareholders at $2/share.
Perfumania came out with an $83.8 million revolving credit facility and 161 stores. Management also said it would invest further in e-commerce to improve its customers’ online shopping experience.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of J.C. Penney. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Camping World Holdings. The Motley Fool has a disclosure policy.
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