While the apparel market’s uncertainty remains rampant, many companies have experienced major financial dilemmas in the past twelve months. Declining mall traffic, e-commerce’s popularity and changing consumer demands prompted some popular retailers to file for bankruptcy this year.
After a year of subpar performance and a lengthy dispute with supplier MGF Sourcing, Aéropostale filed for Chapter 11 in May. The teen retailer utilized the bankruptcy to renegotiate “burdensome” contracts, resolve its conflict with MGF Sourcing, expand its store locations and accomplish long-term financial stability. The bankruptcy filing led to the closure of more than 100 stores in the U.S. and Canada. In September, the bankruptcy court approved the sale of Aéropostale to a joint venture, Aero Opco LLC for $243.3 million. The transaction helped at least 229 stores stay open and allowed the retailer to emerge from its Chapter 11 state.
Hampshire Group ceased its business operations and filed for Chapter 11 in November. The fashion apparel provider failed to locate a financing source to assist its improvement plan and the board of directors determined liquidation would be the best move. Over the summer, an unsecured creditor made poor financial decisions, resulting in accumulating debt and eventually curtains for the company.
Following unfulfilled debt payments and employee layoffs, Sports Authority threw in the towel earlier this year. In March, the sports retailer filed for Chapter 11 to modernize its business strategy. Following this announcement, Sports Authority shuttered its headquarters, axed 461 jobs and initiated going-out-of-business sales at its 450 store locations. Dick’s Sporting Goods bought the sports retailer for $15 million in June and plans to reopen some Sports Authority stores in Q4.
Related Stories
American Apparel’s overseas business took a financial hit this year. The teen retailer entered administration in the U.K. and Ireland this fall, even though it emerged from Chapter 11 bankruptcy proceedings in the U.S. Gildan Activewear acquired American Apparel in November for approximately $66 million and plans to incorporate the brand into its printed T-shirt business.
Myriad internal issues, including employee lawsuits and layoffs, contributed to the downfall of trendy e-tailer Nasty Gal. At the beginning of November, Nasty Gal filed for Chapter 11 to improve its balance sheet and business operations. During the restructuring process, Nasty Gal intends to explore strategic partnerships and search for a new equity partner.
Teen retailer Joyce Leslie filed for Chapter 11 in January after slipping sales and poor performance. As a traditional brick-and-mortar retailer, Joyce Leslie acknowledged that it lacked the resources to compete with today’s e-commerce boom. Joyce Leslie is currently undergoing its restructuring process. The company anticipates generating $63 million in sales for fiscal 2016.
U.K. retailer BHS entered administration in April after failing to secure $86.8 million in emergency funding to pay wages and rent expenses. BHS’ bankruptcy followed the poor financial decisions of owner Sir Philip Green, who sold the troubled retailer to an uncredited group of investors for less than $2 in 2015. After BHS shuttered all its stores in August, it announced that it will continue selling goods on its new e-commerce site.
Golfsmith International Holdings
In September, the world’s largest golf apparel retailer, Golfsmith International Holdings succumbed to bankruptcy. The company filed for Chapter 11 to restructure its operations and rationalize its store network. Golfsmith held a bankruptcy auction in October, where Dick’s Sporting Goods placed $70 million bid to keep at least 30 Golfsmith stores open. Dick’s Sporting Goods plans to convert remaining Golfsmith stores into Golf Galaxy outposts before 2017.
Following months-long bankruptcy rumors, Pacific Sunwear officially filed for Chapter 11 in April. The teen surf-style chain failed to maintain its stock price at or above Nasdaq’s $1.00 requirement and experienced declining sales for fiscal year 2015. Pacific Sunwear emerged from Chapter 11 in September, after California private investment firm Golden Gate Capital purchased the company’s assets and stores.
Sports equipment manufacturer Performance Sports Group filed for Chapter 11 in November to restructure its corporate fleet and finances. Following the bankruptcy filing, Performance Sports Group entered into an asset purchase agreement. An affiliate of Sagard Capital Partners and Fairfax Financial Holdings acquired the company for $575 million.
Activewear brand Yoga Smoga filed for Chapter 11 in December after recently submitting an involuntary Chapter 7 petition. Creditors were seeking $3.2 million from the label for various reasons, including covering payroll when Yoga Smoga’s budget condensed. Yoga Smoga is denying the creditors’ claims and plans on carrying out more store openings next year.