America’s first department store has reached the end of the line, after 194 years in business.
Lord & Taylor and its parent firm Le Tote filed for Chapter 11 bankruptcy court protection on Aug. 2, with a plan to liquidate 19 stores as it scoured the market for a buyer. Last week, the cash-strapped company bumped the store liquidation count to 24 in a bid to keep 14 operational, but after failing to find a buyer, all doors now will go dark instead. Liquidation sales are underway at all locations and are being managed by Hilco Merchant Resources and Gordon Brothers.
“While we are still entertaining various opportunities, we believe it is prudent to simultaneously put the remainder of the stores into liquidation to maximize value of inventory for the estate while pursuing options for the company’s brands,” said chief restructuring officer Ed Kremer.
America’s first department store was founded by Samuel Lord in 1826 as a dry goods business in downtown Manhattan. It later became Lord & Taylor after a cousin George Washington Taylor joined the operation in 1834. The Fifth Avenue location in Manhattan between 38th and 39th Streets, which became a New York City landmark in 2007, was the retailer’s new flagship store and headquarters in 1914. May Company acquired the nameplate when it bought Associated Dry Goods in 1986, of which Lord & Taylor was considered the premier holding. The retailer once laid claim to the title of America’s dress destination for women, and in later years its Manhattan flagship devoted the entire fifth floor to its wide-ranging dress assortment when it was under the leadership of former president Liz Rodbell.
Under May’s ownership, Lord & Taylor went on to absorb the Hahne & Co., Wanamaker’s and Woodward & Lothrop chains, whose locations became Lord & Taylor doors. May was later acquired by Macy’s Inc., in 2005, when it was then known as Federated Department Stores. A year later, the Lord & Taylor chain was acquired by NRDC Equity Partners for $1.2 billion. NRDC went on to acquire Canada’s Hudson’s Bay Co., a 338-year-old retailer, in 2008 for an undisclosed amount and the combined group became known as Hudson’s Bay Co.
HBC sold the Lord & Taylor flagship location on Fifth Avenue in Manhattan to WeWork, a deal that closed in February 2019. The Lord & Taylor store on the site shuttered its doors a month earlier. A year-ago, HBC sold the chain to fashion rental service Le Tote for $100 million, comprised of $75 million in cash up front and a $25 million promissory note.
Le Tote’s initial plan was to use the Lord & Taylor stores to host Le Tote shop-in-shops to introduce the rental business to the department store’s customers. While sales at Lord & Taylor were already slowing, Le Tote’s service was considered one of the more successful direct-to-consumer operations. Rakesh Tondon, Le Tote’s CEO, co-founded the subscription rental platform with Brett Norhart in 2012. As digitally native firms like Le Tote migrate into the physical space to build out their customer bases, the easiest way for companies to build out a store base–and scale up quickly–is to buy an existing retailer, as Le Tote did.
But then the coronavirus pandemic hit in March, and a month later word surfaced that Lord & Taylor and Le Tote began laying off almost all of their staff, leaving the companies’ future in jeopardy. By then, Lord & Taylor was already thought to be headed towards a liquidation once they could reopen the stores. The name could end up in operation as an online business, presuming there’s a buyer for the intellectual property assets. That’s happened before as buyers bought the Dressbarn and Coldwater Creek names and then turned them into online-only platforms. But those deals came prior to the pandemic, and even Coldwater Creek was shut down last month, it ,too, a victim of Covid-19.
Lord & Taylor was the latest in a line of retailers that have filed for bankruptcy in the aftermath of Covid-19’s destructive effects on consumer spending, retail and the economy at large. Unlike J. Crew Group and Neiman Marcus, which are expected to exit bankruptcy proceedings, Lord & Taylor is joining the likes of Stein Mart and Stage Stores, both of which will be relegated to the retail graveyard this year. Bankrupt Brooks Brothers has been sold, while J. C. Penney, which filed its Chapter 11 petition on May 15, is in the midst of negotiating its sale.