Major U.S. department store files for bankruptcy

2020-08-04 14:21:49China Daily Editor : Feng Shuang ECNS App Download
Special: Battle Against Novel Coronavirus

The fallout from the coronavirus pandemic has pushed Lord &Taylor, one of the oldest U.S. department store chains,into bankruptcy along with the parent company of Men's Wearhouse and Jos. A Bank, underscoring the upheaval in the apparel retail sector.

Lord &Taylor temporarily shuttered its 38 brick-and-mortar stores in March but continued to sell online as states imposed restrictions on non-essential stores as part of the effort to curb the spread of the coronavirus.

The Chapter 11 petition filed Sunday in U.S. Bankruptcy Court in Richmond, Virginia, came less than a year after Le Tote, a rental subscription-based fashion brand, purchased Lord &Taylor from Hudson's Bay Co, parent of upscale retailer Saks Fifth Avenue.

The coronavirus pandemic has forced other apparel retailers into bankruptcy, including JC Penney, Neiman Marcus, J. Crew, Brooks Brothers, Stage Stores, Ann Taylor and Lane Bryant.

In the court filing, Lord &Taylor said it plans to hold going-out-of-business sales at its stores.

Lord &Taylor began in 1826 when Samuel Lord and George Washington Taylor opened a dry-goods store in Manhattan. It became an industry icon.

Lord &Taylor was the first to install an elevator, a marvel in its day and the invention that made New York's skyscrapers possible. It also was the first to hire a woman CEO, Dorothy Shaver, who made Lord &Taylor a showcase for American designers in the 1940s and 1950s.

May Co acquired Lord &Taylor in 1986 and added lower-priced goods, held frequent sales and cut investment, eroding the venerable retailer's luxury image.

Lord &Taylor sold its flagship Fifth Avenue store in Manhattan to WeWork for $850 million in February 2019.

WeWork, a provider of shared-office space, pulled its planned IPO in September 2019 because it failed to develop a clear path to profitability, a problem worsened by the coronavirus pandemic, as many worked from home.

Also Sunday, Tailored Brands filed for Chapter 11 bankruptcy protection in Houston. The publicly traded company said it will continue to operate Men's Wearhouse, Jos. A. Bank Clothiers, K&G Fashion Superstore and Moores Clothing for Men.

The company had about 1,400 stores and 18,000 employees. It had already announced plans in July to eliminate 20 percent of its corporate jobs and close up to 500 stores. On Sunday, the company said it planned to use the restructuring process to slash its debt by at least $630 million.

"Our brands have served their communities for decades and built deeply loyal relationships with customers," Dinesh Lathi, CEO of Tailored Brands, said in a statement.

"We remain confident that these relationships and our enduring commitment to help customers look and feel their best will allow us to overcome the challenges of COVID-19. Today, we are taking the next steps to become a financially stronger and more nimble company that is poised to thrive in our ever-evolving business environment."

In July, the company warned that it had "substantial doubt" about its ability to remain profitable following the nationwide economic shutdown.

According to court filings, the company said it had about $2.5 billion in assets and about $2.8 billion in debt.

Prior to the bankruptcy filing, Tailored Brands announced plans to pay about $3.3 million in incentive bonuses to top executives.

The U.S. Commerce Department said retail sales increased 8.5 percent in June, following an 18.2 percent increase in May – the largest gain since the government began tracking the metric in 1992.

Sales rebounded when businesses reopened after being forced to close in mid-March. But new coronavirus cases in the South and West have forced some governors to close businesses again or slow plans to reopen, casting doubt on a continued rebound.

The government is scheduled to release July's retail report Aug 14. Retail sales represent about two-thirds of the U.S. economy.


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