True Religion Files For Bankruptcy As Amazon Claims Another

More bad news for retail. According tot his Zero Hedge report over priced jean maker True Religion has filed for bankruptcy.

Nearly one year after rumors about its upcoming bankruptcy first emerged, overnight US-based denim retailer True Religion Apparel finally threw in the towel when it filed for bankruptcy protection, signing a pre-packaged restructuring agreement with most of its lenders.

True Religion, a company whose denims Reuters says have “gradually fallen out of style”, filed for Chapter 11 creditor protection in the U.S. bankruptcy court in the District of Delaware (case Case 17-11463), and listed assets and liabilities in the range of $100 million to $500 million (see full filing below). According to the prepack agreement agreed upon by lenders, including TowerBrook Capital Partners, will slash the company’s debt by over $350 million. The jean vendor also said it has secured DIP financing from Citizens Bank for up to $60 million.

True Religion Brand Jeans is pleased to announce it has secured critical stakeholder support for a comprehensive financial recapitalization of the Company’s capital structure. In signing a Restructuring Support Agreement (“RSA”) with the substantial majority of its Term Loan Lenders and its Sponsor, TowerBrook Capital Partners, the Company will reduce its debt by over $350 million and convert it into the substantial majority of the reorganized Company’s equity. To implement the terms of the pre-arranged restructuring expeditiously, the Company filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware, and expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the Bankruptcy Court. Throughout the implementation of this process, True Religion will continue to operate its business without interruption to customers, employees and business partners.

“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” True Religion Chief Executive John Ermatinger said in a statement. True Religion also said that critical trade creditors are expected to be paid in full and the company would continue to operate business as usual. The restructuring plan provides for full payment of claims of True Religion’s continuing trade creditors, which includes continuing vendors, suppliers and landlords.

The company listed Wachtell Lipton and Pachulski Stang as legal advisors, while financial advisor is MAEVA Group.

For those seeking a culprit for the latest bricks-and-mortar bankruptcy, look no further than Amazon. The denim retailer’s financial struggles are due in part to consumer tastes shifting toward online shopping and away from the brick-and-mortar shops and department stores where the company’s jeans have been primarily sold.

True Religion said the pre-arranged plan could take about 90 to 120 days to receive confirmation from the bankruptcy court.

Last October, Reuters reported in October that the retailer had hired a legal adviser to explore several debt restructuring options, as such today’s filing should come as no surprise.

Finally, with the True Religion bankruptcy filing, here is the full revised Moody‘s list of which deeply distressed retailer will likely file for bankruptcy next.

  • True Religion Apparel – men’s and women’s clothing
  • Boardriders SA  – sporting subsidiary of Quiksilver
  • The Bon-Ton Stores – parent of department store chain
  • Fairway Group Holdings – food retailer
  • Tops Holding II – supermarket operator
  • 99 Cents Only Stores – discount retailer
  • TOMS Shoes – footwear company
  • David’s Bridal – wedding dresses and formalwear seller
  • Evergreen AcqCo 1 LP – parent of thrift chain Savers
  • Charming Charlie – women’s jewelry and accessories
  • Vince LLC – clothing retailer
  • Calceus Acquisition – owner of Cole Haan footwear firm
  • Charlotte Russe – women’s clothing
  • Neiman Marcus Group – luxury department store
  • Sears Holdings – owner of Sears and Kmart.
  • Indra Holdings – holding company owner of Totes Isotoner
  • Velocity Pooling Vehicle – does business as MAG, Motorsport Aftermarket Group
  • Chinos Intermediate Holdings – parent of J. Crew Group
  • Everest Holdings – manages Eddie Bauer brand
  • Nine West Holdings – clothing, shoes and accessories
  • Claire’s Stores – accessories and jewelry
  • Gymboree – children’s apparel

The running list of 2017 retail apocalypse victims

It’s no secret the retail industry is undergoing a transformational period that has many scaling back physical operations, shuttering stores, reorganizing mounting debt loads and in some cases ending up in bankruptcy court.

Distressed bond issuers in the U.S. retail and apparel markets are nearing recession levels, tripling in the past six years, according to a report released by Moody’s Investors Service. The report found 13.5% of Moody’s retail and apparel portfolio is distressed, compared to 16% during the Great Recession. Debt maturities are also headed toward record levels over the next five years and retailers are filing for bankruptcy at a record rate.

Continue reading “The running list of 2017 retail apocalypse victims”

Children’s retailer Gymboree files bankruptcy, closing up to 450 stores

More bad news for retail. According to this USA Today report children’s retailer Gymboree has filed for bankruptcy.

Children’s clothing chain Gymboree filed for Chapter 11 bankruptcy protection late Sunday, aiming to slash its debts and close hundreds of stores amid crushing pressure on retailers.

Gymboree said it plans to remain in business but will close 375 to 450 of its 1,281 stores, according to a court filing. Gymboree employs more than 11,000 people, including 10,500 hourly workers.

The bankruptcy was widely expected after Gymboree refused to pay certain bills in recent months, placing the retailer on a collision course with creditors. The retailer said it hopes to slash $1 billion of its $1.4 billion in debt and to win approval for its plan by Sept. 24.

“We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree’s long-term growth,” Gymboree CEO Daniel Griesemer said in a statement.

Like other retailers, Gymboree buckled amid declining mall traffic, fixed rental costs and online competition. Other mall retailers that have recently succumbed to bankruptcy include Payless ShoeSource, Rue21 and The Limited.

Global financial services giant Credit Suisse predicted last week that up to 25% of nation’s malls could close by 2022.

Michael Kors plans to shutter 100 to 125 stores

I don’t know how it lasted this long. According to this CNBC report Michael Kors will be closing 100-125 stores over the next two years.

Another retailer has decided to trim its brick-and-mortar fleet.

Michael Kors said Wednesday it will close 100 to 125 full-price stores over the next two years. The company had 827 retail locations as of April 1.

The closures are intended to improve profitability, Michael Kors said. The retailer anticipates ongoing annual savings of $60 million as a result of this plan but will record a $125 million charge.

Michael Kors, among many of its peers in the retail space, has been hurt by lagging sales and dwindling foot traffic as more shoppers choose to ring up purchases online. Further, the retailer has had a difficult time marketing its products at full price.

Shares of the stock slid more than 9 percent during Wednesday morning after the luxury retailer said its fourth-quarter earnings had swung to a loss and it planned to trim its store fleet.

Michael Kors posted a net loss of $26.8 million, or 17 cents per share, in the latest quarter, compared with net income of $177 million, or 98 cents per share, one year ago.

Management said earnings were hurt by $193.8 million in noncash impairment charges that were related to some under-performing stores. Excluding those one-time charges, the company earned 73 cents a share, beating a Thomson Reuters analyst consensus estimate by 3 cents.

“Fiscal 2017 was a challenging year, as we continued to operate in a difficult retail environment with elevated promotional levels,” CEO John Idol said in a statement. “In addition, our product and store experience did not sufficiently engage and excite consumers.”

Meanwhile, total revenue fell 11.2 percent to $1.06 billion, from $1.20 billion a year ago, Michael Kors reported. Analysts were expecting sales of $1.05 billion, according to a Thomson Reuters survey.

Michael Kors said it now anticipates first-quarter sales of $910 million to $930 million, along with a same-store sales decline in the high-single digit range.

A significant comparable sales decline of 14.1 percent for the latest period was bigger than the 13 percent drop forecast by a FactSet survey.

“Michael Kors’ precipitous drop in sales does very little to reassure that the company’s nascent recovery program is on track,” GlobalData Retail Managing Editor Neil Saunders wrote in an email. “Indeed, if anything it raises a question mark over whether management can win back [customers] as it tries to reinvigorate the brand.”

Michael Kors is still carrying baggage from its past, Saunders went on. “Customers alienated by its previous overexpansion and discounting have been given very few reasons to take a fresh look at the brand.”

Winn-Dixie parent to close 20 stores and consider layoffs as grocery industry the next sector to get CRUSHED

A massive consolidation is underway in the grocery industry. Look for grocery stores to be the next industry to get crushed. According to this Food Dive report Winn-Dixie parent, Southeastern Grocers will be shutting down 20 stores. Unfortunately, this sector has failed to do anything that one would consider “innovating” in the last 50 years thus leaving it in prime position to get destroyed by an Uber like app.

Southeastern Grocers will close 20 stores in its Winn-Dixie and Harvey’s footprint, according to Supermarket News. The Jacksonville, Fla.-company also is considering laying off a number of store-level department heads. The publication reported that Southeastern is in talks to refinance its debt.

The Jacksonville, Fla.-based retailer said the closures were part of a customary portfolio review and in some cases accompany lease expirations or the effects of renovations of neighboring stores. Southeastern Grocers, whose operations also include Bi-Lo, said two Winn-Dixie stores shuttered following flooding in Louisiana will not reopen.

“From time to time, the successful execution of our strategy will require us to make the difficult decision to close stores,” Southeastern Grocers spokesman Joe Caldwell told Supermarket News in an email.

Kit and Ace Is Closing All Its US Stores

More bad news for retail. According to this Racked report, Kit and Ace will be closing all their US, UK and Australian stores.

Kit and Ace, the technical apparel company started by Lululemon founder (and ex-CEO) Chip Wilson and his family, is closing all of its US stores. It plans to focus its efforts on its online and Canadian business, the company confirmed.

Wilson’s altheisure company launched in 2014, pushing technical cashmere and luxury athleisure clothing meant to be worn both at and outside of the gym. The company rapidly expanded in the short amount of time it’s been around, growing to 61 stores in five countries and 700 employees by early 2016 — probably not a great idea, considering the currently dismal retail landscape.

“We recognize the traditional world of bricks and mortar retailing is changing, which is why we’re shifting strategies,” Wilson said in a circulated statement. “We believe in the business model for Kit and Ace. Going forward, we will be a stronger company. Fewer stores require fewer people. We remain deeply grateful for the creativity and commitment of those leaving the company and thank them for their valuable contribution.”

While Kit and Ace was in expansion mode (which some dubbed as “unicorn delusions”), Wilson told the Star Tribune in 2015 that the company “had money” and that he didn’t “think we would go into such an aggressive expansion if we didn’t see such excitement in the first few months.” Now, the company is closing 32 stores, leaving just nine open in Canada (though it’s also laid off an undisclosed number of employees in its Vancouver headquarters).

Yesterday, the company put up a message on its Facebook page alerting shoppers that all stores in the US, the UK, and Australia would be closing.

Pollo Tropical closing 30 restaurants

Retail isn’t the only sector struggling. According to this NBC report Pollo Tropical will be closing 30 underperforming locations.

The Fiesta Restaurant Group will close 30 Pollo Tropical restaurants in Texas, Georgia and Tennessee.

Back in October, Pollo Tropical closed 10 of its then 209 locations, most of those in Texas.

On Monday, Dallas-based Fiesta said it was closing all Pollo Tropical locations in Dallas-Fort Worth, Austin and Nashville. Fiesta said it would continue to operated 19 Pollo Tropical restaurants outside its original market of Florida, including 13 in Atlanta and six in Texas.

As many as five closed Pollo Tropicals may be converted to Fiesta’s Taco Cabana brand, the company said.

 

Fiesta said preliminary same-store sales for the first quarter ended April 2 showed declines continued at both its brands. Preliminary same-store sales fell 6.7 percent at Pollo Tropical and dropped 4.5 percent at Taco Cabana.

Nearly 10,000 Stores Could Close This Year As Retail ‘Bubble’ Bursts

As I predicted months ago we are witnessing a monumental downturn in the retail sector. According to this Daily Caller report nearly 10,000 may close this year.

Brick-and-mortar shops and retail chains are closing at a record rate, and there’s no sign the decline will stop, The Wall Street Journal reports.

In the first four months of 2017, retailers have announced a total of 2,880 store closures, and some financial services firm Credit Suisse predicts that around 8,600 stores will close this year. That’s more than closed during the financial crisis in 2008, and twice the number that closed in 2016.

Several smaller stores will shutter all or most of their mall and free standing stores this year. Clothing chain Rue21 announced April 17 that it will close 400 of its 1,100 stores nationwide. Bebe, which sells “unique, sophisticated and timelessly sexy” women’s clothing, will close all of its 168 physical stores nationwide by the end of May, the company announced Friday.

Smaller retail chains are closing the most physical locations, but retail giants are also scaling back. JC Penney will close 128 of its 1,000 locations, Sears plans to close 41 of 695 stores, and Kmart plans to shutter 109 of 735 stores, WSJ reports.

Sears goes into PANIC mode by cutting senior management positions, closing 92 pharmacies in Kmart stores, along with 50 Sears Auto Centers

According to USA Today Sears is aggressively downsizing their sinking ship, by cutting key senior management positions and closing more pharmacy’s and auto centers.

Sears, which has been shuttering stores to boost its bottom line, announced more steps Friday to try to get its financial house in order, including finding an extra $250 million in savings and a new chief financial officer.

The beleaguered retailer has raised its savings goal for this year to $1.25 billion, a target it hopes to reach by cutting some senior management positions, and closing 92 pharmacies in Kmart stores, along with 50 Sears Auto Centers. Those closures come on top of the planned shuttering of 150 under-performing stores that were announced in January.

“Earlier this year, we initiated a strategic restructuring program and committed to improving our operating performance and financial flexibility in a very challenging retail environment,” Edward Lampert, CEO of Sears Holdings, said in a statement. “While we have made significant progress in reducing our cost base and enhancing our member value proposition, we need to take further action.”

Sears has been trying to turn around its flailing operations, selling off pieces of its expansive real estate, borrowing money and shedding some of its vaunted brands. The iconic retailer has been battered by many of the same challenges that are pressuring other traditional store chains which are struggling to compete with Amazon and other online sites.

But Sears’ financial troubles are deep. It hasn’t turned a profit since 2010, and last year racked up more than $2.2 billion in losses. It’s also been dogged by a series of management missteps, from the sale of its more than $30 billion credit portfolio to Citibank in 2003, to a merger with Kmart, another struggling retailer, in 2004.

Subway’s closing of 359 stores marks historic pullback for nation’s most ubiquitous eatery

Subway announced it has CLOSED 359 stores last year, marking the first time in the companies history according to this Dallas News report.

Subway Restaurants closed hundreds of domestic locations last year, marking the biggest retrenchment in the history of a chain that spent decades saturating America with restaurants.

The company lost 359 U.S. locations in 2016, the first time Subway had a net reduction. The store count dropped 1.3 percent to 26,744 from 27,103 in 2015, but Subway remains the nation’s most ubiquitous eatery. (McDonald’s Corp. is No. 1 by sales.)

The closely held company is coping with a sales slowdown in the U.S., made worse by the emergence of newer fast-casual rivals and the industry’s heavy reliance on discounts and promotions. Subway also has lost some of its luster as a healthier-food option. It’s been working to restore its status by eliminating antibiotics from its chicken and switching to cage-free eggs.

In another bid to revive growth, Subway is adding delivery services — a strategy that’s also been embraced by McDonald’s. And it even unveiled a new, more contemporary logo. But so far, the changes haven’t helped much: Sales fell 1.7 percent last year to about $11.3 billion.

Industrywide, same-store sales continued to slide in the U.S. during March. They dropped 0.6 percent in the fourth straight month of decreases, according to MillerPulse data.

The sandwich chain also has been overhauling its management team. On Wednesday, the company said it’s bringing on former McDonald’s executive Karlin Linhardt to lead marketing for the more than 30,000 Subway stores in the U.S. and Canada.

Last year, Subway hired Katie Coleman to handle global public relations. She was tasked in part with helping the chain recover from a scandal involving former spokesman Jared Fogle. He pleaded guilty to child pornography charges and was sentenced to prison in 2015.