With major retail bankruptcies, including Payless, Gymboree and The Children's Place filing in 2019, RetailDive.com examined who in the industry might be vulnerable going forward. Relying on data from CreditRiskMonitor, which estimates the risk of a company with publicly traded debt or bonds filing for bankruptcy within 12 months based on several streams of data, RetailDive put together an analysis of potentially vulnerable retailers. Retailers in the analysis include Neiman Marcus, J. Crew, Francesca's, Rite Aid, J.C. Penney, Pier 1, Ascena Retail Group, Destination Maternity, Tailored Brands, Stein Mart, Overstock.com, Camping World Holdings.
Edward Lampert’s new Sears was pushed by a bankruptcy judge yesterday to smooth over its disagreements with the entity left behind in bankruptcy protection, the Wall Street Journal reported. Mr. Lampert’s new Sears, known as Transform Holdco LLC, and the old Sears, still known as Sears Holdings Corp., have been sparring over the terms of new Sears’s purchase of the company’s assets. On Thursday, Judge Robert Drain in the U.S. Bankruptcy Court in White Plains, N.Y., set aside new Sears’s mediation request and encouraged the two entities to try to resolve their dispute. The new Sears took the first swing in early March, when it claimed old Sears breached its asset-purchase agreement by intentionally delaying payments to vendors and shortchanging the new company on promised inventory. Old Sears fired back, asking a bankruptcy judge to force new Sears to pay it $57.5 million. Mr. Lampert’s ESL Investments won court approval in February to purchase 425 Sears and Kmart stores for $5.2 billion, and the deal closed days later. The old Sears remains under bankruptcy protection as it works on a chapter 11 plan that will determine how much investors, vendors and professionals recover from the sale proceeds.
Brookstone will stay alive online and in airports, Chain Store Age reported. A bankruptcy court judge approved the retailer’s reorganization plan, which includes selling Brookstone’s online and wholesales businesses and all intellectual property to a partnership formed by private equity firm Bluestar Alliance and electronics manufacturer Apex Digital. The sale, worth about $65 million, saves about 30 of Brookstone’s airport shops, the company’s website, wholesale operations and about 300 jobs. Brookstone filed for chapter 11 bankruptcy protection in August, listing assets of $50 million to $100 million and liabilities of $100 million to $500 million. The 45-year-old company closed its remaining 101 mall stores, but continued to operate its airport stores, e-commerce and wholesale businesses while it looked for a seller. Brookstone blamed deteriorating mall traffic, supply chain issues, technical problems and management turnover for its recent problems.
Nine West Holdings Inc. has exited bankruptcy proceedings and has been renamed Premier Brands Group Holdings LLC, The Wall Street Journal reported. Premier Brands will have more than $100 million of capital to support its operations and growth efforts. Nine West announced a settlement to be taken over by creditors in New York bankruptcy court last month, a deal that included shaving debt obligations by more than $1 billion. That deal ended a courtroom contest over grants of legal immunity to the company’s former owner, private-equity firm Sycamore Partners LP. Nine West filed for chapter 11 bankruptcy protection in April of last year. Premier Brands produces jeanswear, women’s apparel and accessories as well as licenses brands including Anne Klein, Gloria Vanderbilt, Kasper and Napier.
A Texas judge Tuesday dismissed a bondholder lawsuit against Neiman Marcus Group over the company’s transfer of its MyTheresa e-commerce business beyond the reach of bondholders, WSJPro reported. Judge Tonya Parker of Dallas County District Court dismissed a lawsuit filed in December by Marble Ridge Capital LP that alleged that the company’s transfer of its MyTheresa e-commerce business was a fraudulent transaction. Judge Parker cited the lack of “subject matter jurisdiction” for the ruling, meaning Marble Ridge doesn’t have standing to bring the lawsuit. The verdict removes one hurdle to Neiman Marcus’s ongoing debt-restructuring talks with bondholders and lenders. The department store chain is in talks with its creditors to extend the maturity of $4.7 billion in debt to 2023. Those talks didn’t include Marble Ridge. MyTheresa is a fast-growing Munich-based online business that caters to customers in Europe, Asia and the Middle East. In September, Neiman Marcus transferred ownership of MyTheresa to its parent company, which weakened bondholders’ claims on the business.
Shopko will begin closing its remaining stores this week after the private-equity-backed retailer said it was unable to find a buyer for its general merchandise chain, WSJPro reported. The Green Bay, Wis.-based company, founded in 1962, said it is evaluating options for its optical business. Shopko entered bankruptcy in January with about 370 stores and initially planned to reduce its footprint to about 260 locations. In February, it said it was aiming to get down to about 120 stores and 61 stand-alone optical centers. But it was unable to find a buyer for the remaining locations. Gordon Brothers will oversee the liquidation process, Shopko said. Shopko was bought by private-equity firm Sun Capital Partners Inc. in 2005. The company filed for bankruptcy with about 14,000 employees. Papers filed in U.S. Bankruptcy Court in Omaha, Neb., show the remaining stores will close by mid-June.
Sears thought about buying Best Buy in the late 1990s, according to its former CEO, the (Minn.) Star Tribune reported. Former Sears Chief Executive Arthur Martinez told the Wall Street Journal that in late 1998, he approached leaders of the Richfield-based business, as well as Home Depot, as a way to get access to off-mall locations. “The issue that we had was that 90 percent of our stores were in shopping malls. Everybody could see what was going on with Walmart, Target and the others going to strip centers," Martinez revealed for the first time in a story Friday. “That was increasingly more customer-friendly than the schlep from a big parking lot all the way into the mall.” The proposal hardly caused a ripple, by Martinez’s account. “Best Buy’s expectations were so high that there was no favorable return on our investment. I think the stock was at $7 and founder Dick Schulze wanted in the high $20s,” he told the Journal. A potential merger with Home Depot ran into antitrust issues. Sears emerged from bankruptcy in early February after a decades-long spiral and $5.5 billion in debt nearly sank the once-mighty retailer. A bankruptcy judge allowed chairman, former CEO and largest creditor Eddie Lampert to purchase Sears through his hedge fund. Sears is closing many of its stores, including the anchor spot at the Mall of America, which is scheduled to go dark later this month. The retailer eventually will slim down to 425 smaller-format stores. At the time of its chapter 11 filing last October, there were 700.
It was the 1970s and Sears was at its peak. It dominated American retailing. Its corporate headquarters was the tallest building in the world. A job at Sears was a ticket to a long and lucrative career. But rivals like Walmart were bearing down, shopping patterns were changing, and Sears started making a series of wrong bets, according to an analysis in the Wall Street Journal. Over the last four decades, a succession of CEOs have tried to reinvent, reimagine and, finally, save Sears. One discussed merging with rivals Best Buy and Home Depot, talks not previously reported. Another opened the door to hedge-fund billionaire Eddie Lampert, who went on to slash spending with little investment in stores. Amid new consumer habits, technology shifts and Sears’s own missteps, customers fled. What were the turning points when it lost its grip on the American shopper? Here is the story, told by eight people who lived it (edited from interviews).
Pier 1 Imports Inc. has tapped debt-restructuring lawyers to navigate potential negotiations with lenders as it struggles with falling sales, sending shares of the U.S. home furnishing retail chain sharply lower, Reuters reported. Known for selling wicker chairs and scented candles, Pier 1 has suffered financial losses amid an increasingly competitive retail landscape dominated by the likes of Amazon.com Inc. and Walmart Inc. Pier 1, which has roughly 987 stores in the U.S. and Canada, has added debt-restructuring specialists at Kirkland & Ellis LLP to a roster of advisers counseling the chain as it explores strategic alternatives. Pier 1 is also taking meetings with investment bankers who have debt-restructuring expertise as it weighs options, said the sources, who spoke on condition of anonymity because the company’s deliberations are confidential. As of December, the company had about $200 million in long-term debt. Pier 1 shares plunged more than 45 percent in New York Stock Exchange trading to well below $1 after Reuters reported the company’s moves, leaving the retailer with a market capitalization of about $50 million. As of March 2018, the company employed roughly 18,500 people at its stores.
The issues facing Edward Lampert’s new Sears are piling up as the old Sears demands more cash it says it is owed from last month’s sale of the retailer’s assets at a bankruptcy auction, WSJ Pro Bankruptcy reported. Sears Holdings Corp., the company left behind in bankruptcy after Lampert’s purchase of Sears stores and other assets, is asking a bankruptcy judge to force the new company to pay $57.5 million, according to court papers filed on Monday. The amount at issue includes credit card and cash proceeds from sales made at stores after the closing of the sale to Lampert, as well as remaining cash in bank accounts and a portion of February rent paid, court papers show. Following a three-day sale hearing, Lampert’s ESL Investments won court approval to buy 425 Sears and Kmart stores for $5.2 billion. On Feb. 11 ESL announced the acquisition was completed.
