bookmark_borderApparel companies and the pandemic: closings, bankruptcies and liquidations

Brooks Brothers’s bankruptcy filing (see previous post) is the latest and largest apparel company impacted this the summer. But several other brands have encountered headwinds, some with more drastic outcomes.

Last week, Lucky Brand Dungarees filed for chapter 11 bankruptcy protection, citing the coronavirus’s impact on sales. Lucky announced at least 13 store closings, and has lined up a stalking horse bid to sell its physical assets as well as the brand rights.

Fellow denim label G-Star RAW also filed for bankruptcy, but with more optimistic plans. The company noted its relatively low debt and sees an opportunity to rethink its retail approach.

More radically, Need Supply and sister label Totokaelo are shutting down entirely. End dates have not been announced, and the company is choosing to close rather than going bankrupt, but the stores will be gone soon.

Also, the G.H. Bass and Wilsons Leather stores are going out of business. Parent company G-III, streamlining its portfolio in the wake of the coronavirus crisis, announced the permanent closure of both brands with liquidation sales to start shortly.

Many other brands have announced store closings of various scale, from Zara (which will close up to 1200 locations worldwide) to Victoria’s Secret (250 store closings this summer and fall, a result of parent company L Brands failing to sell the marque) to Signet Jewelers (as many as 300 store closings this year). Additional stores are covered in the link above.

bookmark_borderBrooks Brothers files for bankruptcy

Legendary retailer Brooks Brothers, which dates to 1818 and has dressed all but four U.S. Presidents, filed for bankruptcy protection today. The company is battling both covid-related declines in shopping and a shift to more casual attire that is accelerating as workers head to the office less.

Brooks Brothers’ filing is notable as it is one of the few large retailers with significant manufacturing in the United States. Last month, the company announced layoffs and posted for-sale signs at its three domestic factories, a response to slower sales during the pandemic.

According to the Wall Street Journal, Brooks Brothers plans to use the bankrupty process to find a buyer. A sale would continue the company’s interesting time capsule of apparel industry consolidation and trends. Its rich domestic history notwithstanding, Brooks Brothers hasn’t been an American-owned company since 1988, when the holding company Allied Stores sold the brand to British retailer Marks & Spencer. For the past 19 years the Brooks Brothers Group has been owned by Claudio del Vecchio, part of the family behind global eyewear powerhouse Luxottica.

bookmark_borderNear-term effects

Something to look out for in the near term in shopping is a glut of merchandise in non-essential segments. Fashion, for one, will be dealing with high inventory levels as stores reopen, particularly at fast fashion chains like H&M. This could mean good deals for shoppers, as well as headaches for sellers, who need to clear out merchandise and make room for upcoming stock, presuming supply chain disruptions have been kept to a minimum.

The Wall Street Journal speculates that retailers might see “years of depressed profit margins” as they try and reset after the pandemic—and that savvy shoppers could snap up some great deals this summer.

bookmark_borderL Brands closing 300 stores

The parent company of Victoria’s Secret and Bath & Body Works is closing hundreds of stores as it grapples with lost revenue from the coronavirus crisis.

The company, which sold itself earlier this year, only to see the deal fall apart earlier this month, has announced direct action instead. The company will close 250 Victoria’s Secret locations as well as 50 Bath & Body Works stores.

L Brands was once a powerhouse retailer known as Limited Brands, whose portfolio at its peak included the Limited, Abercrombie & Fitch, Lerner and Henri Bendel.