Los Angeles-based retailer Lucky Brand filed for Chapter 11 bankruptcy protection on Friday, reports AP News. The apparel retailer blames its troubles in part on the coronavirus pandemic and said it plans to close 13 stores immediately, with more closures possible during the bankruptcy process. Lucky Brand said it has a deal lined up to sell the company to SPARC Group, the owner of retailers including Nautica and Aeropostale, for $140.1 million in cash and $51.5 million in credit. The offer would preserve much or all of the company’s current network of stores. Lucky Brand anticipates a sale closing by mid-August.
Total Retail's Take: As the COVID-19 pandemic lingers, more retailers are unfortunately being swept into a tide of bankruptcies. Lucky Brand joins GNC, Tuesday Morning, J.C. Penney, Stage Stores, Neiman Marcus, True Religion and other retailers that have sought Chapter 11 protection during the health crisis. Chief Restructuring Officer Mark Renzi said Lucky Brand was "undermined by a shift among shoppers away from brick-and-mortar stores, compounded by temporary store shutdowns due to the virus outbreak this spring." The chain was also "hurt by limited liquidity, which made it harder to get new inventory from vendors." Like other retailers, Lucky Brand had furloughed over 2,500 employees during the pandemic to cut costs, but that wasn't enough to avoid a bankruptcy filing.
However, Chapter 11 doesn't have to mean the end for Lucky Brand (and other retailers). For retailers that still have relevance with consumers, a Chapter 11 reorganization presents an opportunity to reinvent themselves. As we watch these companies take on bankruptcy, it will be interesting to see which ones are able to innovate and transform back into thriving businesses.
Kristina Stidham is the digital content manager at Total Retail and sister brand Women in Retail Leadership Circle. She is passionate about digital media and handles social media, video, and podcast production for both brands, as well as contributing articles and attending events. Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia.