As consumers continue to shift away from brick and mortar stores opting for online shopping instead, traditional retailers are struggling to keep up. Some are restructuring and closing stores, while others won’t survive their fall out at all. Here, a comprehensive list of brands who have declared bankruptcy since late last year and where they stand today.
Things first started to get rocky for Nasty Gal as early as 2015, when the company cut jobs and its infamous founder Sophia Amoruso was kicked out of the CEO position a year later, embroiled in plenty of pending lawsuits and other drama. Eventually, it couldn’t escape a bankruptcy and filed for Chapter 11 protection last fall. In the middle of proceedings, it failed to secure additional funding and was bought out by British e-tailer boohoo.com for a mere $20 million.
With its high-profile, petulant founder ousted and two bankruptcy filings within a year (the last occurring in November, 2016), perhaps no other retailer’s demise is as visible as American Apparel’s. Add to that laying off thousands of employees and closing all physical store locations (110 in total) with going out of business sales, and American Apparel’s downfall was long and sweeping. Canadian clothing company Gildan Activewear bought part of the company, minus its retail operations, last year at auction for $88 million. It is continuing to close all stores, turning to wholesale and online operations instead. Its merchandise will also no longer be made in Los Angeles, Gildan plans to move production to Central America and Caribbean islands.
Mall brand and staple The Limited was the first mass market retailer to declare bankruptcy this year, hurt by lagging mall traffic. Proceedings started with corporate restructuring and planned store closings, followed by a bankruptcy filing with a hope to find a buyer. It worked, being quickly scooped up by Sycamore Partners for $26.75 million in February. Since then, the company plans to close all store locations (upwards of 200 nationwide) and the website has gone dark, leaving a question mark as to what lies ahead for The Limited.
Wet Seal fell on hard times in recent years, bogged down by debt. The company first declared bankruptcy in 2015 and re-emerged under Versa Capital Management. Since then, it dramatically downsized its retail footprint from 500 stores nationwide to 170 but ended up having to file for bankruptcy yet again in February of this year. Less than one month later, Boston-based financial firm Gordon Brothers scooped up its trademarks, domain names, customer databases and e-commerce platform for $3 million.
In March 2017, BCBG filed for bankruptcy for the third time in two years. At the time, it secured $45 million in funding to pull through until it could go through a court-supervised sale of itself, with a deadline set for May of this year. In the process, the company started closing 120 of its 200 stores.
Although Bebe never technically filed Chapter 11, and has no current plans to, it is currently closing up all of its brick and mortar locations while turning to an online-only model. The news was announced in March after the company retained a new financial advisor. The retailer was also hit by declining mall traffic but was able to pull through without declaring bankruptcy because the company doesn’t carry a lot of debt.
Last month, mass shoe retailer Payless announced that it filed for Chapter 11 bankruptcy and revealed plans to restructure its operations. Among its initiatives are closing 400 of its 4,400 stores throughout the U.S. and Puerto Rico, while expanding its online presence. The company claimed these moves will help reduce its debt by 50%, which inflated after a takeover by a private equity firm in 2012. The company has secured access to financing of up to $385 million with new term loan financing reaching $80 million.
Teen retailer Rue21 headed to bankruptcy court earlier this month, after already having started massive store closures (to the tune of 400 locations), with a swift turnaround plan to keep them afloat. But it’s not all bad news, the company was able to secure creditors and is optimistic about making it through this restructuring as a private company.