This week retailers face the end of partnerships, the winding down of physical store businesses and the legal ramifications of financial maneuvering.
Bebe avoids bankruptcy
The contemporary fashion chain Bebe Stores, which announced last month that it would shutter all doors, has reached an agreement with its landlords, allowing the retailer to avoid a bankruptcy filing.
Reuters reports the chain was able to offer deals to mall operators, including Simon Property Group and General Growth Properties, that exceeded the amount they would have received after it filed for bankruptcy protection.
Sources close to the matter say Bebe will continue online.
The store closures will cost the retailer $20 million, which will be recorded in the third and fourth quarters of fiscal year 2017.
The publication notes Bebe was in a position to bargain because unlike many other faltering retailers, the company has very little debt and a significant amount of cash.
Last year, the retailer entered into a $35 million deal that gives Bluestar Alliance rights to Bebe’s intellectual property to develop a wholesale licensing business domestically and abroad. Bebe retained just over 50 percent control in the joint venture.
Macy’s and Tailored Brands to part ways
Macy’s Inc and Tailored Brands announced Thursday that the companies would end their tuxedo rental license agreement, which began on June 9, 2015.
Both retailers noted the arrangement with Tailored Brands’ Men’s Wearhouse property failed to result in the sales each had anticipated.
The Tuxedo Shops at Macy’s will continue taking orders through June 1, with final operations winding down by July 14. After that point, customers will have the option of transferring their rental reservations to the closest Men’s Wearhouse or Jos. A. Bank.
As a result of this decision, Tailored Brands updated its FY 2017 outlook. The company anticipates one-time charges of $17 million related to the development. Excluding those charges, Tailored Brands expects an operating loss on the Macy’s rental business of $7 million to $8 million, compared to its previous outlook of an operating loss of $19 million to $20 million.
The company’s updated guidance put diluted earnings per share in the range of $1.37 to $1.67, and adjusted diluted EPS, which excludes the one-time charges, of $1.60 to $1.90. This compares to previous guidance of diluted EPS in the range of $1.45 to $1.75.
Report: Neiman Marcus potential deal with HBC stalled
In March, it was reported that Hudson’s Bay Company might be interested in picking up Neiman Marcus, which had put itself up for sale.
Though neither party has confirmed these talks, the New York Post is now saying that any progress may be facing challenges. The paper said Neiman Marcus’s move last month to put its MyTheresa business and its San Antonio, Texas, Longview Texas, and McLean, Virginia, properties into a subsidiary has the retailer’s term loan lenders and bondholders considering a lawsuit.
Jude Gorman, general counsel at Reorg Research, told the paper that from the lenders’ perspective, the move is viewed as breach of contract that has been a “point of contention” causing the lenders to organize.
A source close to these developments is quoted by the paper as saying, “The problems and uncertainties facing Neiman’s are delaying a transaction with HBC. Neiman’s is about to be sued by its lenders for moving assets from the company, and that’s slowed down the transaction.”
Neiman Marcus, which also operates Bergdorf Goodman, is struggling under $5 billion in debt.
Hudson’s Bay, which owns Saks Fifth Avenue and Lord & Taylor, has been on the hunt for additional properties. In February, it was rumored the retailer was interested in acquiring Macy’s.