National Stores, Inc., which operates the Fallas budget retail chain, has filed for bankruptcy protection.
The company filed for Chapter 11 relief in Delaware to provide it with the opportunity to reorganize. As part of the restructuring, National Stores plans to shutter 74 locations of the 344 stores it operates under a variety of banners, including Factory 2-U and Anna’s Linen’s by Fallas.
“National Stores, historically a profitable company, is committed to improving its financial health and returning to profitability. Our goal is to emerge a reorganized company poised to compete in an evolving industry so that we can continue to serve the communities where we are rooted,” CEO Michael Fallas said in a statement.
The company, which offers apparel for the entire family at price points that top out well below $20, has secured $108 million in debtor-in-possession financing from existing lenders.
According to The Wall Street Journal, the company owes roughly $220 million to its vendors.
The National Stores bankruptcy follows a tumultuous era for retail in which store chains have struggled to evolve at a pace that mirrors consumers’ changing shopping patterns. Though the apparel retail space has been more even keeled of late than last year, analysts continue to talk in terms of “winners and losers” with some stores on an uptick and others still struggling with continuous erosion from e-commerce, slow supply chains and low foot traffic.
Not only has National Stores been grappling with underperforming stores, the company said it has been plagued with severe weather that damaged property and forced temporary store closures. Adding to the retail chain’s issues was the financial strain associated with the purchase of the Conway banner, as well as a data breach that occurred during the second half last year.
The retailer, which opened in 1962, will begin closing sales on Thursday.