Mexican retailer Grupo Famsa on Thursday said that a shareholder meeting authorized a request to file for chapter 15 protection in the U.S. and bankruptcy in Mexico, Reuters reported. “The presentation of both applications has been carried out before the competent jurisdictional authorities,” the retailer said in a filing to the Mexican stock exchange. “Grupo Famsa will seek to reach an agreement and a comprehensive solution by restructuring its liabilities through dialogue with creditors so as to strengthen its financial situation, safeguarding its interests and those of creditors.”
A group of lenders steering J.C. Penney Co.’s bankruptcy process is asking potential buyers of the retail chain to increase their bids after a round of offers in July were seen as too low, Bloomberg News reported. The lenders are pushing for offers closer to the approximately $2.2 billion of J.C. Penney’s debt they hold. Earlier proposals from mall owners and retail firms added up to payments of about $1.8 billion. If those don’t improve, the lenders could acquire the company through a credit bid, in which they forgive the debt in return for ownership. A bid from mall owners Simon Property Group Inc. and Brookfield Property Partners LP is viewed more favorably in part because it’s likely to preserve the most jobs. The two landlords have an incentive to keep J.C. Penney alive because it’s one of their largest tenants. J.C. Penney employed almost 85,000 people when it went bankrupt in May. Private equity firm Sycamore Partners and Saks Fifth Avenue owner Hudson’s Bay Co. were also among the first round of bidders. Both firms own retail chains they could potentially combine with J.C. Penney or some of its brands.
A report by CBRE Group Inc. said that New York was already dealing with a glut of retail space — and the pandemic is making it worse. Average asking rents in Manhattan, which have been sliding for years, plunged to the lowest level since 2011 in the second quarter, Bloomberg News reported. Vacancies are growing in prime shopping districts, the firm said. Then there are the bankruptcies. Brooks Brothers and Neiman Marcus Group Inc. are just two on the growing list of companies that have filed for chapter 11, potentially adding to a glut of empty stores. “It’s a nightmare,” said Tom Mullaney, managing director of restructuring at Jones Lang LaSalle Inc. “A lot of stores are going to disappear and never come back.” Midtown’s office workers are at home, and many are expected to stay there for months. The same is true of international tourists, with a 40 percent decline seen this year, according to the Partnership for New York City. In addition to national chains, the group estimated that as many as one third of the city’s 230,000 small businesses will close for good as restaurants and bars struggle to pay rent with social distancing sapping business.
Department stores were once on the leading edge of retailing — big, exciting places to shop, where consumers could find everything from the latest toaster to an evening dress and matching shoes. Now, they are fighting for their lives, the Wall Street Journal reported. In May, J.C. Penney Co., Neiman Marcus Group Ltd. and Stage Stores Inc. filed for bankruptcy, adding to the list of chains that have shrunk or disappeared in recent years. Saving the department store — or at least salvaging it — isn’t impossible, but doing so will require a radical rethink of how stores operate and relate to shoppers, say veteran retail executives. It would be easy to blame the rise of fast fashion, off-price chains like T.J. Maxx, the internet and, most recently, the COVID-19 pandemic for the demise of department stores. But rivals in Europe and Japan are healthier, even with those factors in play. In the U.K., Harrods and Selfridges are renowned for their food halls, which provide a sensory experience not replicated online. In Japan, the department store Nihombashi Mitsukoshi has hosted exhibits where artisans make ceramics, weave fabrics and practice other traditional crafts, creating a sense of theater. “The U.S. players haven’t been able to replicate the same type of excitement and pizzazz,” said Craig Johnson, president of consulting firm Customer Growth Partners. “U.S. department stores are too stale and slow.” Former industry executives date the problems to the 1980s, when a series of mergers and overexpansion led to bloat. “The focus became more about how to take care of the corporate office, not the customer,” said Allen Questrom, the former CEO of Neiman Marcus, Barneys New York Inc., J.C. Penney and Federated Department Stores Inc., which later became Macy’s Inc.
Every week seems to bring another round of retail bankruptcies. With conditions worsening, the numbers are likely to keep climbing, Bloomberg News reported. Over the weekend, Tailored Brands Inc. — the owner of Men’s Wearhouse and JoS. A. Bank — and department store Lord & Taylor filed for chapter 11. The Canadian unit of Chico’s FAS Inc. declared bankruptcy on July 31. The previous week, it was Ann Taylor and Lane Bryant parent Ascena Retail Group Inc. At least 25 major retailers have now filed for bankruptcy this year, with 10 of these coming over the last five weeks. The steady drumbeat of bankruptcies goes back to mid-March, when the lockdown of non-essential retailers began in an attempt to halt the spread of COVID-19. The U.S. economy has now largely reopened, but this hasn’t provided relief to the battered industry, which has taken on more leverage in the battle to survive. “The common denominator is debt,” said Simeon Siegel, an analyst at BMO Capital Markets. “At this point, now everyone has debt. Everyone took on massive amounts of liquidity.” With the U.S. seeing a resurgence of COVID-19, retailers are now flying blind into the year’s most vital shopping months. Companies have to juggle decisions on cost cutting, store closures and merchandise without having a clear picture of where consumer demand will be or how bad economic conditions will get. Apparel sales were down about 30 percent in June, even as overall U.S. retail sales have picked up this summer, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence. As many as 25,000 stores are expected to close in the U.S. in 2020, mostly in shopping malls, according to Coresight Research. Department stores and fashion boutiques are seen as the most endangered.
The survival of J.C. Penney Co Inc hangs on whether the department store chain can reach a complex deal within days to sell itself to an alliance of retail mavens and distressed-debt investors, Reuters reported. The 118-year-old retailer blew through a Friday deadline from lenders to sort through bids that would take the company out of bankruptcy proceedings that were commenced in May after the pandemic forced it to temporarily close all its 846 stores. The Plano, Texas-based company, already facing concerns from U.S. Bankruptcy Judge David Jones that its restructuring is not moving fast enough, is racing to reach agreement on a sale that would carve the retailer into three pieces. The company is hoping to file court papers as soon as this week disclosing details of a deal, though the timing could slip. J.C. Penney has lost money for years, grappling with consumers shifting to online shopping and competition from discount retailers. It is among a cascade of retailers undone by the pandemic, including Brooks Brothers and Lucky Brand Dungarees, now attempting to withstand unprecedented economic turmoil and stay in business through bankruptcy sales. Some J.C. Penney vendors are demanding cash-on-delivery before shipping merchandise, the person familiar with the matter said, an onerous term for a retailer with strained finances accustomed to paying for goods later.
The parent company of the Men’s Wearhouse and Jos. A. Bank menswear brands entered bankruptcy hoping to turn around the nearly half-century-old business in the midst of the COVID-19 pandemic by slashing at least $630 million in debt while pivoting to casual wear from business clothing, WSJ Pro Bankruptcy reported. Retailer Tailored Brands Inc., which also owns retail brands K&G Fashion Superstore and Moores Clothing for Men, filed for chapter 11 bankruptcy protection on Sunday after revenue declined by about 5.6 percent over the past two fiscal years ending in February, despite a dominant position in the menswear market. The company couldn’t avoid bankruptcy once the coronavirus pandemic forced its stores to shut temporarily and slashed demand for dress clothes as millions of Americans started working from home. COVID-19 restrictions also have caused supply-chain disruptions, reduced store traffic, and cancellations of large gatherings such as proms and weddings. The company had reported a net sales decline of more than 60 percent for the quarter ended May 2 compared with the same period a year earlier. Tailored Brands is forecasting total revenue of $1.4 billion for the 2020 fiscal year and $2.4 billion for 2021, compared with $2.9 billion it generated in 2019. Tailored Brands blamed its pre-pandemic struggles on missteps including a limited range of style offerings and pricing that missed out on revenue opportunities, as well as underinvestment in casual selections and e-commerce as customers gravitated toward online purchases. On top of that, price increases over multiple years led to higher prices compared with the competition, resulting in lower customer counts, store traffic and unit sales. Now, the Fremont, Calif., company said it wants to speed up plans to mix its products as sales of tailored clothing decrease. It intends to focus more on its selection of polished casual clothing, including sport coats, pants, dress shirts and sportswear.
Venerable U.S. retailer Lord & Taylor filed for chapter 11 bankruptcy yesterday, becoming the latest in a growing list of storied names to do so amid the ongoing coronavirus outbreak that has crippled the retail sector, Reuters reported. The company estimated both assets and liabilities in the range of $100 million to $500 million, its filing in the U.S. Bankruptcy Court for the Eastern District of Virginia showed. A storied department store chain founded in 1826, billed as the oldest in the U.S., Lord & Taylor had been exploring other options as well as filing for bankruptcy. Big names that already filed for chapter 11 include J Crew Group, JC Penney and Neiman Marcus in May, while Lucky Brand became a casualty of the pandemic in July. Fashion rental service start-up Le Tote acquired Lord & Taylor last year from Saks Fifth Avenue owner Hudson’s Bay Company for C$100 million ($74.62 million). Hudson’s Bay had kept ownership of some of Lord & Taylor’s real estate and assumed responsibility for its rent payments, amounting to tens of millions of dollars a year.
Tailored Brands Inc., the parent company of Men’s Wearhouse and Jos. A. Bank, has filed for bankruptcy after the coronavirus pandemic slashed demand for dress clothes, the Wall Street Journal reported. The publicly traded company filed for chapter 11 protection yesterday in the U.S. Bankruptcy Court in Houston. The move comes after the menswear retailer warned in late July that it had substantial doubt about its ability to continue as a going concern and that it was likely to file for bankruptcy as soon as its third quarter, which begins Aug. 2. The company operated more than 1,400 stores and employed 19,300 people in the U.S. and Canada as of Feb. 1, according to a securities filing. A regulatory filing in May showed that money-management giant BlackRock Inc. owned about 15.8 percent of Tailored Brands’ common stock, private investment firm Scion Asset Management LLC had about 8.3 percent and investment adviser Vanguard Group had about 7.2 precent. In response to the pandemic, Tailored Brands has said it was evaluating various alternatives to improve its liquidity, such as securing rent concessions and deferrals, cutting costs and raising more capital.
