Denim and accessory brand Diesel USA Inc. filed for Chapter 11 bankruptcy Tuesday, reports Reuters. The company's Italian parent brand Diesel SpA was not involved in the bankruptcy filing. Diesel USA claimed expensive leases, a sales plunge, and $1.2 million of losses from theft and cyber fraud as main contributors to the decline of profitability over the past six years. The apparel and accessories company does not plan to close, but will exit some of its stores with expensive leases. Furthermore, Diesel introduced a three-year plan to focus heavily on profitable stores and work closely with social media influencers to attract millennial and Gen Z shoppers.
Total Retail's Take: As the retail industry continues to evolve, brands that do not innovate and push digital initiatives to attract younger shoppers will be challenged to survive. Diesel USA joins a plethora of brick-and-mortar stores to file for Chapter 11 in the first few months over 2019, including Gymboree, Shopko, Things Remembered, and others. The denim brand seems to recognize its need to become more digital, with a plan to focus on using social media influencers to attract younger audiences. To return to profitability, Diesel USA will need to double-down on digital marketing and customer acquisition efforts to gain the millennial and Gen Z consumers it desires.