Fashion and retail was already in the midst of major transformation when the coronavirus shutdown hit hard this spring.
Companies, many of them with heavy debt loads, were racing to connect with consumers in a more digital world and working to reshape the in-store experience to draw shoppers and keep their attention. But then almost all the stores closed as the COVID-19 crisis forced consumers to maintain a new kind of social distance. That starved businesses of cash and forced them to seek protection from their creditors.
Here, companies in and around the fashion industry that turned to bankruptcy court in the crisis.
April 6 — The London-based department store files its notice of intent to appoint an administrator.
Debenhams sought bankruptcy protection after failing to keep up with a now-familiar combination of retail woes including declining foot traffic, debt and the pandemic.
Stefaan Vansteenkiste, chief executive officer, said, “These are unprecedented circumstances and we have taken this step to protect our business, our employees and other important stakeholders, so that we are in a position to resume trading from our stores when government restrictions are lifted.”
April 13 — The Vernon, Calif.-based denim brand files for Chapter 11 bankruptcy.
The apparel brand cited plummeting revenues and difficulty paying rent in its bankruptcy filing in Delaware last month. The company has sought to defer rent payments for 60 days during the bankruptcy, a fraught request that is now becoming the norm for retailers filing for Chapter 11 during the COVID-19 era.
John Ermatinger, ceo, said: “We’re reducing our debt so that we can reinvest in broader global e-commerce, innovative product initiatives and smarter retail strategies. The current retail landscape is shifting, and True Religion is taking action. We’ve been in the denim game for 15 years, and we recognize that it’s time to grow and evolve. Just like everyone else, we have aspirations and dreams for the future. We are a dedicated team, focused on looking ahead and moving forward with a fresh perspective.”
Creative Hairdressers Inc.
April 23 — The Vienna, Va.-based hair salon company files for Chapter 11 bankruptcy protection.
Creative Hairdressers, which operates 750 salons under the Hair Cuttery, Bubbles and Salon Cielo nameplates, was forced to close its doors in the COVID-19 crisis and reached a deal to sell its assets to HC Salon Holdings, an affiliate of Tacit Salons Holdings, which provided the firm with debtor-in-possession financing.
Azhar Quader, chairman of Tacit, said he expects the salon business to emerge from the COVID-19 pandemic “in a stronger financial position.” “We’re focused on saving jobs for salon professionals and building a strong, financially healthy company,” he said.
J. Crew Group
May 4 — The New York-based retailer that owns J. Crew and Madewell files for Chapter 11 protection.
The retailer filed for bankruptcy in the Eastern District of Virginia with plans in hand to restructure the business. The company had negotiated a $400 million in debtor-in-possession and exit financing package with existing lenders including Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management, and is continuing to negotiate with landlords.
Jan Singer, ceo, said: “This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J. Crew and further enhancing Madewell’s growth momentum.”
April 30 — The Dallas-based men’s wear company files for Chapter 11 protection.
With the pandemic leading to a steep sales decline, the brand’s largest vendor stepped in to provide debtor-in-possession financing.
Dave DeFeo, ceo, said: “J. Hilburn has a loyal client base. We believe in our stylists, in the growth potential of the men’s custom market, and in the ability of our management team to lead the company to future success. Together, the company and our stylists community, along with our loyal clients, will weather this economic turmoil and come out on the other side as a stronger and more successful business.”
May 6 — The New York-based designer men’s wear brand files for Chapter 11.
The brand said it had been on a path to a turnaround after falling sales and online revenues since 2015, when the pandemic hit in the U.S. this year.
Joseph Zorda, chief financial officer, said: “The unprecedented, exponential spread of the coronavirus disease COVID-19 throughout the U.S.…along with the resulting, state-imposed limitations and prohibitions on nonessential retail operations, destroyed the debtors’ blossoming success, having a debilitating effect on the debtors’ business and employees.”
Neiman Marcus Group
May 7 — The Dallas-based luxury department store files for Chapter 11 protection.
Neiman’s buckled under the debt load that came with its $6 billion leveraged buyout by private equity fund Ares Management and investment fund Canada Pension Plan Investment Board in 2013. Like J. Crew, the retailer entered the Chapter 11 proceedings with a restructuring plan that contemplates eliminating $4 billion in debt.
Geoffroy van Raemdonck, chairman and ceo, said: “Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth. We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omnichannel penetration and made meaningful strides in our transformation to become the preeminent luxury customer platform. Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
Stage Stores Inc.
May 10 — The Houston-based retailer files for Chapter 11 protection.
Stages Stores tried a last-ditch reinvention, moving to convert all of its stores over to the Gordmans off-price model last year. The effort, though, didn’t produced the hoped-for boost over the holiday season and the retailer came into the COVID-19 crisis weakened.
Michael Glazer, president and ceo: “This is a very difficult announcement and it was a decision that we reached only after exhausting every possible alternative. Over the last several months, we had been taking significant steps to attempt to strengthen our financial position and find an independent path forward. [But] the increasingly challenging market environment was exacerbated by the COVID-19 pandemic, which required us to temporarily close all of our stores and furlough the vast majority of our associates. Given these conditions, we have been unable to obtain necessary financing and have no choice but to take these actions.”
J.C. Penney Co. Inc.
May 15 — The Plano, Tex.-based department store files for Chapter 11.
The retailer survived the disastrous attempt at reinvention under former ceo Ron Johnson, but ran headlong into the COVID-19 shutdown as it was still trying to find its way back.
Jill Soltau, ceo, said: “The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring J.C. Penney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. Until this pandemic struck, we had made significant progress rebuilding our company under our plan for renewal strategy — and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt.”