Every Household-Name Brand Filing for Bankruptcy or Closing Stores Amid the Coronavirus Pandemic
From iconic stores to famous chain restaurants, a growing number of beloved brands are filing for bankruptcy, shifting their focus to e-commerce, or shutting down operations entirely as they face unprecedented financial stress
Godiva, which has many stores in shopping malls, said in a statement that demand for in-person shopping "waned as a result of the pandemic and its acceleration of changes in consumers’ shopping behavior."
After offering designer apparel, footwear, cosmetics and décor at discounted prices for nearly 60 years, the chain retailer has filed for Chapter 11 bankruptcy. The brand also announced it will be shutting all 13 locations in New York, New Jersey, Pennsylvania and Florida. The company said it will start liquidation sales in stores and online.
In a statement obtained by Fox 5 New York, Century 21 said the decision followed nonpayment on its business interruption insurance by approximately $175 million.
“We now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time,” Century 21 co-CEO Raymond Gindi said in the statement.
The department store said it would have been able to “weather” the financial storm caused by the coronavirus pandemic, had it received insurance money it claims it was owed.
"While retailers across the board have suffered greatly due to COVID-19 ... we are confident that had we received any meaningful portion of the insurance proceeds, we would have been able to save thousands of jobs and weather the storm,” Century 21 said in a statement obtained by CNN Business.
Lord & Taylor
UPDATE, Aug. 27, 2020: Lord & Taylor is officially going out of business. The nearly 200-year-old company announced that all 38 remaining stores have started liquidation sales.
"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," Lord & Taylor's chief restructuring officer Ed Kremer said in a statement obtained by CNN Business.
Less than a year after Hudson's Bay Company sold the nearly 200-year-old department store to Le Tote, an online clothing rental service, both Lord & Taylor and Le Tote filed for Chapter 11 bankruptcy protection in the Eastern District of Virginia on August 2.
Le Tote, a San Francisco-based startup founded in 2012, paid 100 million Canadian dollars in cash in 2019 to acquire the department store's brand and inventory, online operations and control of its 38 retail locations. However, HBC agreed to retain ownership of all Lord & Taylor real estate.
Although Lord & Taylor and Le Tote continued operating online throughout the pandemic, the company's mounting debt obligations led to the bankruptcy filing.
In a statement to customers shared on its website, Lord & Taylor originally announced plans to seek a new owner.
"Today we announced our search for a new owner who believes in our legacy and values. Part of our announcement also includes filing for Chapter 11 protection to overcome the unprecedented strain the COVID-19 pandemic has placed on our business," the statement said at the time.
Will the pandemic mark the end of the business suit? After announcing plans to close 500 stores “over time” in July, the retailer’s parent company filed for Chapter 11 protection in Houston on Aug. 2.
According to a press release, Tailored Brands, which also owns Jos A. Bank, Moores Clothing for Men and K&G Fashion Superstore, entered into a financial restructuring plan to “to reduce the Company’s funded debt by at least $630 million,” and focus on generating profit. The company also announced it received $500 million in debtor-in-possession financing to maintain operations.
“As evidenced by the positive results we saw in January and February, we have made significant progress in refining our assortments, strengthening our omni-channel offering and evolving our marketing channel and creative mix,” said Tailored Brands President and CEO Dinesh Lathi in the release. “However, the unprecedented impact of COVID-19 requires us to further adapt and evolve.”
As for Tailored Brands’ future, Lathi remains positive, adding, “Reaching an agreement with our lenders represents a critical milestone toward our goal of becoming a stronger Company that has the financial and operational flexibility to compete and win in the rapidly evolving retail environment.”
California Pizza Kitchen
The casual dining chain announced on July 30 that it has filed for voluntary Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas, saying in a press release that the move will allow it "the ability to close unprofitable locations, reduce its long-term debt load, and quickly emerge from bankruptcy as a much stronger company."
Jim Hyatt, CEO of CPK, said in a separate message on the company website that the chain had already shuttered some of its locations prior to the filing, citing "the impact of the COVID-19 pandemic and lease related challenges with our landlords."
According to the company, remaining CPK restaurants will continue to operate throughout the restructuring process.
“The unprecedented impact of COVID-19 on our operations certainly created additional challenges, but this agreement from our lenders demonstrates their commitment to CPK’s viability as an ongoing business," Hyatt said in the press release. "Throughout this process we will continue to deliver the same innovative, California-inspired cuisine that we have been serving for over 35 years."
There are currently over 200 CPK locations in eight countries and U.S. territories, according to the company.
Ann Taylor & Lane Bryant
Ascena Retail Group, which owns several well-known brands including Ann Taylor, Loft and Lane Bryant, announced on July 23 that it entered a restructuring support agreement and filed Chapter 11 petitions in the Eastern District of Virginia.
“The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the COVID-19 pandemic,” said Carrie Teffner, interim executive chair of Ascena in the press release. “As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders.”
According to the release, Ascena will close “a significant number of Justice stores,” as well as “a select number of Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores” across North America. All Catherines stores are set to close.
The company also secured $150 million from existing lenders to assist in the restructuring, pending court approval.
New York & Company
Despite high-profile collaborations with celebs like Gabrielle Union and Eva Mendes, New York & Company wasn't able to weather the COVID-19 storm. On July 13, the clothing chain's parent company, RTW Retailwinds, Inc., announced in a press release that it filed for Chapter 11 bankruptcy protection.
According to the release, the company "expects to close a significant portion, if not all, of its brick-and-mortar stores" and has begun the liquidation process. It is also "evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property."
“The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future," Sheamus Toal, CEO and CFO of RTW Retailwinds, Inc., said in the release.
In recent years, New York & Company has become known for its celebrity collaborations with the likes of Gabrielle Union, Kate Hudson and Eva Mendes. However, the chain still struggled to maintain sales. On July 6, the parent company was removed from the New York Stock Exchange, according to the SEC.
The iconic retailer, which was founded in 1818, filed for Chapter 11 bankruptcy protection on June 8 as it searches for a buyer.
"Over the past year, Brooks Brothers’ board, leadership team, and financial and legal advisors have been evaluating various strategic options to position the company for future success, including a potential sale of the business,” a spokesperson for the retailer said in a statement obtained by CNBC. “During this strategic review, COVID-19 became immensely disruptive and took a toll on our business.”
The spokesperson went on to say that the company is currently looking to identify the "right owner, or owners, to lead our iconic Brooks Brothers brand into the future."
The brand, which describes itself as "the country's oldest clothing retailer," has offered timeless, preppy designs for generations — and has dressed 40 of the 45 U.S. presidents. In 1900, Brooks Brothers launched its signature Original Polo Button-Down Oxford that has since become “the most imitated item in fashion history," the brand says.
Currently, Brooks Brothers has more than 500 stores worldwide and employs 4,025 people, CNBC reports. In April, the retailer closed 51 of its retail locations amid temporary nationwide retail closures due to the coronavirus pandemic.
The Los Angeles-based denim brand filed for Chapter 11 protection on July 3, after struggling to transition from brick-and-mortar stores to online platforms amid the novel coronavirus, according to the Wall Street Journal. The outlet reports that the clothier has experienced “month-over-month decline in revenue of about 50 percent” as retailers across the country were forced to close due to the pandemic.
Lucky Brand, which was founded in 1990, owes $182 million to lenders and $79 million to merchandise vendors, according to the bankruptcy filing obtained by the WSJ, and plans to close at least 13 of its more than 200 North American stores.
However, The SPARC Group LLC (the operating company behind Aéropostale and Nautica) has proposed a deal to buy Lucky Brand, according to court documents obtained by the WSJ.
"The COVID-19 pandemic has severely impacted sales across all channels,” interim CEO and executive chairman Matthew A. Kaness said in a statement, according to USA Today. “While we are optimistic about the reopening of stores and our customers' return, the business has yet to recover fully.”
Days after furloughing many of its 14,000 employees, Neiman Marcus officially announced its decision to file for bankruptcy on May 7, according to NBC News.
The company operates 43 Neiman Marcus stores, 22 Last Call stores and two Bergdorf Goodman stores and has a borrowings total of about $4.8 billion, according to credit rating firm Standard & Poor’s. Some of that debt is left over from its $6 billion buyout in 2013 by its owners, private equity firm Ares Management Corp and Canada Pension Plan Investment Board.
In an official statement, chairman and CEO Geoffroy van Raemdonck said, “Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business."
van Raemdonck continued, “We will emerge a far stronger company. In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company.”
J.Crew Group lenders agreed to convert the company's estimated $1.65 billion of debt into stock. According to several reports, the company (which also operates sister brand Madewell) will continue e-commerce sales and hopes to reopen stores when social distancing restrictions are lifted.
"We will continue all day-to-day operations," J.Crew Group CEO Jan Singer said in a statement, according to CNN.
J.Crew declined PEOPLE's request for comment.
Diane von Fürstenberg
Prolific designer Diane von Fürstenberg’s fashion empire is shrinking significantly. The New York-based label laid off 75 percent of its 400-person staff, and is set to close 18 of its 19 retail stores. Its new focus will be centered on a "digital-only, China-focused" business model, according to Business of Fashion's latest report published on June 15.
The news comes after several rounds of restructuring within the company and years of declining sales. The DVF store in New York City's Meatpacking District (which also holds the company's office and a living space for von Fürstenberg) is the only location that will remain open.
The designer, 73, gained national success in 1972 thanks to her invention of the sought-after wrap dress. The brand went on to flourish and von Fürstenberg quickly became a household name.
On April 13, the designer denim brand filed for Chapter 11 bankruptcy protection for the second time in three years, according to a report from Forbes.
“While the debtors would have preferred to wait-out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so,” according to court documents obtained by Forbes, which noted that store closures caused by coronavirus accelerated the company's problems.
True Religion previously filed for bankruptcy in 2017 and exited in four months after it invested in its e-commerce business, closed stores and slashed its more than $350 million of debt.
24 Hour Fitness
The fitness chain, which closed its gyms in March due to the ongoing pandemic, announced on June 15 that it was “implementing a financial restructuring, through a voluntary Chapter 11 filing.”
“This process gives us the opportunity to reposition 24 Hour Fitness by eliminating debt and closing clubs that were either out-of-date or in close proximity with other 24 Hour Fitness clubs,” the company wrote in a statement shared on its website.
"If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11," CEO Tony Ueber said in a statement, while maintaining hope about the company's future. “We expect to have substantial financing with a path to restructuring our balance sheet and operations to ensure a resilient future. The COVID-19 environment has proved that attention to health and fitness are more important now than ever before.”
Although the company still plans to reopen many clubs across the county by the end of June, it will also permanently close over 130 gyms. The majority of the gyms affected by the closures are in California and Texas.
Chuck E. Cheese
UPDATE, June 25, 2020: The show may not go on for Chuck E. Cheese after COVID-19. On June 25, the brand behind the popular kid’s restaurant, CEC Entertainment, announced it filed for Chapter 11 bankruptcy protection. They expect to continue operating through the bankruptcy, and will keep reopening locations that were closed due to the pandemic.
The Texas-based chain currently operates 610 locations in 47 states but had to close its stores when the pandemic struck, making it extremely difficult for the company to raise capital.
According to The Takeout, some 17,000 workers were laid off in March. In an attempt to make money (and keep on some employees) during the pandemic, the store masqueraded as Pasqually's Pizza and Wings on delivery apps, a reference to one of Chuck E. Cheese's bandmates.
Pier 1 Imports
After its "orderly wind down" of its retail operations, the home decor company, which had previously filed for bankruptcy in February, intends to sell off its remaining assets in a "court-supervised" process.
"This decision follows months of working to identify a buyer who would continue to operate our business going forward,” Robert Riesbeck, Pier 1's CEO and CFO, said in the statement.” Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down.”
While their brick-and-mortar stores are gone, the company is "currently continuing to serve customers through Pier1.com, and orders are being processed and filled," the company said in its statement.
The department store chain announced on May 15 that it filed for Chapter 11 bankruptcy protection from its creditors as part of a restructuring plan that would eliminate "several billion dollars of indebtedness" and "provide increased financial flexibility to help navigate" the health crisis. The company also said that it plans to close stores, but did not disclose specific locations or timing.
J.C. Penney had been struggling with declining sales for years after hedge fund manager Bill Ackman, who was ousted in 2013, attempted to rebrand the retailer into a collection of boutiques, according to the New York Times.
CEO Jill Soltau said the company had been making "significant progress" in restoring financial strength before the coronavirus outbreak, but the temporary closure of J.C. Penney stores nationwide "necessitated a more fulsome review to include the elimination of outstanding debt."
Souplantation & Sweet Tomatoes
The buffet chains' parent company Garden Fresh Restaurants has decided to permanently shutter all 97 locations of Souplantation — also known as Sweet Tomatoes outside of Southern California — and lay off its workforce, CEO John Haywood confirmed to the San Diego Union-Tribune on May 7.
“The FDA had previously put out recommendations that included discontinuing self-serve stations, like self-serve beverages in fast food, but they specifically talked about salad bars and buffets,” Haywood said. “The regulations are understandable, but unfortunately, it makes it very difficult to reopen. And I’m not sure the health departments are ever going to allow it."
According to the outlet, 4,400 employees will be affected by permanent closure.
Le Pain Quotidien
The fast-casual bakery chain announced it would close all 98 of its U.S. locations after filing for Chapter 11 bankruptcy protection in May. However, at least 35 stores will potentially be reopened at a future date following a partial buyout by Aurify Brands.