Wednesday, March 8, 2017

Hurt By Weak Holiday Sales, More Retailers File For Chapter 11

By Lisa Fickenscher
The New York Post
March 8, 2017

The seeds of a disappointing holiday retail season are beginning to sprout scores of store closings.

Within the past week, two long established retailers filed for bankruptcy protection — electronics chain, HHGregg and women’s apparel chain, BCBG Max Azria Group — while Vanity Shop, a 137-store apparel chain in Fargo, ND, said on Tuesday that its liquidating all its stores.

Meanwhile, two other chains, Gander Mountain and Radio Shack, could file for court-protected reorganization this week while a third chain, Payless Shoes, could file for bankruptcy protection in April, according to industry sources.

“There is a seasonality component,” said bankruptcy lawyer Jeffrey Cohen of Lowenstein Sandler. “After coming out of a fourth quarter that was not as good as they’d hoped, retailers are placing new orders for the spring which creates tension between them and their lenders.”

Rising interest rates are also a factor in the acceleration of filings, say retail experts.

“Lenders recognize that if sales numbers are not turning around and forecasts by the retailers are falling short of their own guidance, they have no interest in pumping even more money,” into these failing businesses, said Richard Weltman, a bankruptcy expert at Weltman & Moskowitz.

As many has 5,000 stores are expected to close this year, a 25 percent increase over last year, according to Cushman & Wakefield.

Vanity Shop which has been in business in the Midwest since the late 1950s blamed its demise on “the pressures facing mall-based specialty apparel retailers in the wake of ever-increasing competition from ‘fast-fashion chains and e-commerce sites,” the company said in a statement.


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