Los Angeles—Love Culture Inc., a specialty retailer catering to 18-to-35 age range women, reported Wednesday it become the latest women’s retailer to file for Chapter 11 bankruptcy.
Following Chapter 11 filings from Loehmann’s, Ashley Stewart, Coldwater Creek and Dots, Love Culture said it plans to close money-losing stores, restructure its debt and investigate options “including a possible sale of substantially all of its assets as a going concern.”
Possible Buyers Loom?
Moreover, “several financial and strategic buyers” have expressed interest in the company, and four have submitted letters of intent. Two earlier bids were rejected as inadequate, the 82-unit retailer said.
In a court filing, Love Culture’s Chief Restructuring Officer Rick Bunka said sales remain below projections (net sales were $162.4 million in the year ended Feb. 1). In April vendors began cutting credit and demanding payment for goods faster or upon delivery, leading to “significant liquidity challenges,” Bunka said.
Started by former Forever 21 executives Jai Rhee and Bennett Koo in 2007, Love Culture opened its e-commerce store in 2010 and added its more upscale brand Boutique Culture in 2012.
But that expansion evidently took its toll leading to “poor performance,” while the cost to upgrade technology and expand online added to liquidity problems that were disrupting “consistent and meaningful delivery” of fresh merchandise to stores, Bunka said.
Love Culture is seeking a buyer through a court-supervised auction and hopes to have a sale hearing by July 29. If the process is prolonged, the company “may not have sufficient liquidity to support a sale of the assets,” Bunka noted.
In a petition filed with the U.S. bankruptcy court in Newark, Love Culture said it has as much as $50 million in both assets and liabilities.
Love Culture’s advisers include PricewaterhouseCoopers LLC and Lowenstein Sandler, a law firm.