Lord & Taylor, Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men, K&G Fashion Superstore parent companies file for bankruptcy

August 2, 2020

by Daphne Sorenson

(Photo courtesy of Men’s Wearhouse)

On August 2, 2020, two major retail companies filed for bankruptcy: Le Tote Inc. (the San Francisco-based parent company of department store Lord & Taylor) and Tailored Brands Inc. (the Fremont, California-based parent company of Men’s Wearhouse, Jos. A Bank, Moores Clothing for Men and K&G Fashion Superstore). Hundreds of stores will be shuttered and thousands of employees will be laid off as a result of these bankruptcies.

In 2019, Le Tote purchased Lord & Taylor from Saks Fifth Avenue owner Hudson’s Bay Co. for $71 million. Lord & Taylor was founded in New York City in 1826, reported $137.9 million of debt obligations in the bankruptcy. At the time of the bankruptcy filing, Lord & Taylor had 38 stores and 651 employees

According to Bloomberg: “Under the deal with Hudson’s Bay, the seller agreed to cover Lord & Taylor’s rent for three years, saving Le Tote $58 million annually. Le Tote said in a court filing Sunday that its companies reported revenue of about $253.5 million in 2019 … Executives at the company have planned to cut the number of Lord & Taylor stores and target younger women with luxury try-on studios, beauty subscriptions and rental drop-off points.”

Tailored Brands was founded in the Houston are in 1973 by George Zimmer, under the name Men’s Wearhouse. Zimmer famously appeared in TV ads for Men’s Wearhouse for several years in the 1980s and 1990s, with the slogan: “You’re going to like the way you look. I guarantee it.” The company went public in 1992, and Zimmer was ousted from the company in 2013, reportedly because he had difficulty adjusting to the company being public instead of private.

At the time of the bankruptcy filing, Tailored Brands had about  1,274 retail and apparel rental stores in the U.S. and 125 in Canada, and employed approximately 18,000 people. As of this writing, it’s unknown how many of these store locations will be permanently closed, but analysts estimate that it will be hundreds.

According to Bloomberg: “The plan calls for a $500 million bankruptcy loan backed by the company’s existing revolving credit facility lenders. Tailored Brands will ask the court’s permission to access the loan combined with cash on hand, including $90 million of previously restricted cash made available to fund operations throughout the restructuring. The bankruptcy loan will then convert to a $400 million revolving credit facility upon emergence from Chapter 11 … The company’s term loan holders will receive their portion of an exit term loan of between $325 million to $425 million and 100% of the reorganized equity, according to court documents. Shareholders will be wiped out, with no recovery from the plan.”

Even before the coronavirus pandemic (when LeTote and Tailored Brands temporarily closed all of retail locations on mid-March 2020), the companies were already headed toward financial disaster, since they had been closing an increasing number of stores since 2018. Depending on the state, county or city in the United States, some clothing retail stores have re-opened since the pandemic, while others have not, as of this writing. The re-opening policies vary.

Le Tote and Tailored Brands are among the growing list of fashion retailers that have declared bankruptcy since 2018. Barney’s filed for Chapter 11 bankruptcy in 2019, while Nieman Marcus did the same in May 2020. J. Crew declared Chapter 11 bankruptcy in May 2020. Low-end clothing retailers that shuttered in 2019 included Gymboree and Payless ShoeSource.

Other fashion retailers that had a massive percentage of store closures in 2018 and 2019 included Victoria’s Secret, Gap, Kohl’s, Abercrombie & Fitch, Foot Locker, Children’s Place and David’s Bridal. A few fashion retailers (such as Charlotte Russe and Bebe) have emerged from bankruptcy and are slowly trying to build back their business under new ownership. Department stores that carry fashion (such as Macy’s, JC Penney, Kmart and Sears) have also been closing stores.

 

Fashion retail in crisis: Top 15 companies that will have the most store closures in 2018

June 7, 2018

by Daphne Sorenson

Shopping habits have radically changed in the past 20 years. Online shopping is a trend that’s not only here to stay, it’s growing. And many retail companies that rely on brick-and-mortar stores for most of their sales have seen their business suffer as a result. The fashion retail business has been hit especially hard. Business Insider recently published a list of retailers that will close the most stores in 2018, and half of the companies on the list are retailers whose core business is fashion.

Trying on clothes and accessories in person and being able to bring home those purchases immediately may seem like the main reasons why people would want to do their fashion shopping in a brick-and-mortar store. But the reality is that many customers have been increasingly turned off by shopping in stores, for various reasons such as lousy customer service and the inconvenience of having to travel to a brick-and-mortar store. With many online retailers offering deep discounts, free shipping and convenient return policies, it’s easy to see why online shopping has become so attractive to consumers.

Here are the fashion retail companies that are facing the most closures in 2018, according to Business Insider and other sources.

1. Ascena Retail Group (Parent company of Ann Taylor, Loft, Lane Bryant, Dress Barn, Catherines and Maurices)

Number of stores expected to close: 667

2. Gap Inc. (Parent company of Gap, Banana Republic, Old Navy, Intermix, Weddington Way and Athleta)

Number of stores expected to close: 200

3. The Children’s Place

Number of stores expected to close: 144

5. Signet Jewelers (Parent company of Sterling Jewelers, Kay Jewelers, Jared and Zales)

Number of stores expected to close: 120

6. Foot Locker

Number of stores expected to close: 110

7. Gymboree

Number of stores expected to close: 102

8. Payless ShoeSource

Number of stores expected to close: 100

9. Abercrombie & Fitch (Parent company of Abercrombie & Fitch, Abercrombie Kids and Hollister Co.)

Number of stores expected to close: 60

10. Michael Kors

Number of stores expected to close: 50

11. Crocs

Number of stores expected to close: 49

12. Bon-Ton

Number of stores expected to close: 42

13. Guess

Number of stores expected to close: 45

14. Henri Bendel

Number of stores expected to close: 23

15. J. Crew (tie)

Number of stores expected to close: 20

15. Victoria’s Secret (tie)

Number of stores expected to close: 20

 

Hudson’s Bay sells Gilt, will close several Lord & Taylor stores, including landmark Manhattan location

June 5, 2018

by Daphne Sorenson

Lord & Taylor's The Dress Address
Lord & Taylor’s The Dress Address (Photo courtesy of Lord & Taylor)

Hudson’s Bay—the parent company of Saks Fifth Avenue and Lord & Taylor—is closing about 10 Lord & Taylor stores, including the landmark Manhattan location, by 2019. Meanwhile, Hudson’s Bay is selling online retailer Gilt Group to Rue La La at an undisclosed sum.  Hudson’s Bay bought Gilt Groupe in 2016 for $250 million.

In a statement, Hudson’s Bay said the closures were because of  “Lord & Taylor’s increasing focus on its digital opportunity and [Hudson’s Bay] commitment to improving profitability.” The Lord & Taylor location on Fifth Avenue in Manhattan opened in 1914. Hudson’s Bay sold the landmark building to WeWork for $850 million. In November 2017, Walmart announced that Lord & Taylor will have a flagship store on Walmart.com.

The Lord & Taylor closings are another example of how brick-and-mortar fashion retailers are struggling in the midst of growing trends of online shopping. In September 2017, Neiman Marcus announced that it was closing 10 of its 37 Last Call discount stores. The year 2017 also saw the demise of Bebe stores in the United States.

And things aren’t getting better. Ascena Retail Group—the parent company of Loft, Lane Bryant, Ann Taylor, Dress Barn, Catherines and Maurices—will close about 500 stores in 2018. J. Crew, Gap, Abercrombie, Bon-Ton, Crocs, Michael Kors, Guess, Macy’s, David’s Bridal, Payless and Hot Topic are also struggling financially and are expected to close several stores in 2018.