The move of a retailer to shutter shops and bankruptcy is a sign of difficult times for other retailers based on shopping centres.
At that time, it is a troublesome young retailer rue21, whose once bright star quickly fell into the limelight after an overzealous expansion effort after his 2013 takeover by Apax Partners and a late 2016 executive who left the company without any problems.
In mid – April, the company announced that it intends to close nearly 400 stores in 1, 200 stores, and on Monday evening, the company announced that it had applied for bankruptcy under Chapter 11, aimed at reducing debt and providing additional capital for restructuring.
While the struggling teen retail business sank, the clothing industry hardly raised a collective eyebrow.
This is because, according to alixpartner’s data from CNBC, retailers were able to achieve a year – long peak since the Great Recession in 2008, when 18 retailers fell back to chapter 11 bankruptcy protection.
In recent years, the younger and younger industry has been able to cope with a real storm, as online competition has affected both the dynamics of the supply chain and the price points, while the ever faster trend cycle of fast fashion retailers means that they are slow to catch up.
However, in an increasingly crowded market, businesses that are neither cheap, nor fast or innovative, are falling on the margins and are replaced by brands that are already able to speak to a digital – and easily bored – at the age of teenagers and tweens.
Apart from trends, every business has its own set of problems.
While they had fierce competition from Forever 21, Zara, H and new competitors on the internet, their brand was warm, accessible and the product was at the forefront of demographic trends. They were even one of the first to include larger sizes. But then the company became greedy.
While other retailers began cutting new shops and even closing a few doors, the rue21 of 450 stores began to grow to 1, 200 stores in 2009.
The capital structure of Rue21 cannot absorb the current collapse in The retail trade, but still, rue21 has never been an easy trade for investors, even from the beginning.
In 2013, the company underwent a rigorous syndication process to fund its takeover by Apax Partners, partly because of the profit concerns associated with the inherent fashion risks associated with the tween clothing chain.
The company could not grow into its capital structure because it caused a lot of profit losses. Then there were Also less obvious problems : “even below the surface was the rue21 of relations with the supply chain, because we saw that the factors became more and more upset when the top line collapsed,” said Basu.