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_borderLargest franchise operator of Wendy’s and Pizza Hut locations is bankrupt

Restaurant operator NPC International, which has been in business since 1962, announced a bankruptcy filing yesterday. The company operates more than 1500 Pizza Hut and Wendy’s locations.

NPC did not announce any store closings, and the filing is meant to address its $900 million–plus debt load. Financial explorations predate the pandemic.

bookmark_borderGNC files for bankruptcy, announces store closings

Struggling vitamin and nutrition retailer GNC announced a chapter 11 bankruptcy filing, with plans to close nearly 1200 of its 5800 retail locations. The company cited covid-19–related store closings as a main driver of the filing.

GNC did secure $130 million in financing to endure the pandemic and successfully emerge from the bankruptcy process.

bookmark_borderHertz files for bankruptcy protection

Hertz Global Holdings, the parent company of the Hertz, Thrifty and Dollar rental car agencies, filed for bankruptcy protection Friday. The firm has suffered from the lack of travel during the covid-19 pandemic, making it impossible to service $19 billion of debt, much of it securitized (which means Hertz could be forced to sell off its assets to repay creditors).

Since the beginning of the crisis, the company had named a new CEO and laid off 10,000 workers as it grappled with its finances.

bookmark_borderJ.C. Penney restructuring to include 240 store closings

J.C. Penney, one of the longstanding American department store chains, has announced plans to close more than 240 of its 846 stores as part of its bankruptcy restructuring.

Penney, which filed for Chapter 11 bankruptcy protection on May 15, has been struggling to attract customers for years, with a stock price below $1 for much of 2020.

bookmark_borderNeiman Marcus files for bankruptcy

Storied retailer Neiman Marcus filed for Chapter 11 bankruptcy protection on May 7, with coronavirus-driven decline in revenue making it impossible for the company to maintain its debt servicing.

The chain, whose in-store sales were stable, had been through two corporate acquisitions that saddled it with $5.1 billion in debt. Most of its stores have been temporarily closed.