Department Store Chain Belk to File for Bankruptcy
Belk, the North Carolina-based department store chain which has catered to generations of shoppers for nearly 190 years, announced Tuesday it will file for Chapter 11 bankruptcy. The chain's owner, private equity firm Sycamore Partners, said in a news release that Belk will continue with "normal operations" as it goes through bankruptcy, The Charlotte Observer reported. Sycamore Partners said it expects to emerge from bankruptcy by the end of February. It will retain majority control of Belk, according to an agreement it reached with some of Belk's creditors. The bankruptcy plan will help Belk shed about $450 million of debt.
Total Retail's Take: Belk has been saddled with debt since its sale to Sycamore. In addition, the department store model has fallen out favor with consumers in recent years as they have increasingly moved online to shop, and brands have begun selling their products direct to consumers, bypassing department store chains such as Belk. Add in the COVID-19 pandemic, which has caused store closures and an increase in e-commerce activity, and Belk found itself in a difficult position. A bankruptcy filing will enable the retail chain to shed some debt and provide it with the financial flexibility necessary to better compete in a changing retail environment — one in which Belk will need to invest in digital and omnichannel solutions and services to keep pace.