Sandpoint, ID–Coldwater Creek Inc., which has been struggling to turnaround from seven straight quarters of losses, reported Monday that it secured a $65 million loan from Golden Gate Capital, the private equity investment firm.
Noting that the deal with Golden Gate is a “strong endorsement” of Coldwater Creek and its turnaround strategy, Dennis Pence, Coldwater’s chairman/ceo, added: “Golden Gate Capital brings a highly flexible investment approach and extensive retail expertise, which will be beneficial in the continued revitalization and long-term growth of Coldwater Creek.”
In recent quarters, Coldwater Creek has been cost cutting as well as updating assortments to better suit its mostly age 40 and above consumer. As part of a three year plan to close as many as 45 stores, Coldwater shuttered 15 stores or outlets so far this year. Despite these measures, the company’s stock price has declined 40% in the last three months.
‘Solid Foundation in Place’ for Turnaround
In return for the five-year loan, Golden Gate will place two directors on Coldwater’s board of directors. One of them, Neale Attenborough, Golden Gate’s retail group operating partner, said, “We believe that the initiatives currently underway, supported by our investment, give Coldwater Creek’s management team the necessary time and added resources to successfully execute on its plan.”
Golden Gate is one of the most active private equity investors in the retail and restaurants sector. Some of the firm’s retail portfolio companies include Eddie Bauer, J. Jill, Zales and Express. Over the last 12 months, Golden Gate has also announced investments in California Pizza Kitchen, Pacific Sunwear, and the pending Payless ShoeSource acquisition from Collective Brands.
“Coldwater Creek is a strong brand that has undergone significant changes over the past year to reposition its core offering and now, with a solid foundation in place, is realizing the benefits of these changes,” said Josh Olshansky, managing director of Golden Gate Capital.
In conjunction with the closing of the Golden Gate term loan, Coldwater Creek has completed an amendment to its $70 million revolving credit facility with Wells Fargo Capital Finance as well as the retirement of a separate $15 million term loan previously provided by Wells Fargo.