The retail world was rocked by more bankruptcy news on Wednesday (July 8), as Brooks Brothers officially announced its long-rumored bankruptcy and women’s fashion icon Ann Taylor was reported to be preparing for a Chapter 11 filing.
The Brooks Brothers announcement had been speculated upon even before the pandemic, but the chain recently suffered from the double-whammy of COVID-19 and work-from-home lockdown measures that made “suit up and show up” an empty phrase. The filing in Delaware allows the retailer to stay open while it crafts a plan to emerge from Chapter 11. The company listed assets and liabilities of at least $500 million each in court papers, and a spokesperson said via email that it had lined up a $75 million bankruptcy loan, according to Bloomberg.
Interest in the brand has centered on its possibility as a fashion license rather than a going retail concern. The leading contender to buy the business is Authentic Brands Group (ABG), which has rescued Forever 21 and owns several licenses, from Elvis Presley to Marilyn Monroe. But according to Yahoo! Finance, ABG has competition from Marquee Brands (Martha Stewart, Bruno Magli), WHP Global (Anne Klein) and even Sequential Brands (Ellen Tracy, Revo). The filing on Wednesday was something of a surprise, because it was expected that one of these companies and Brooks Brothers would reach a deal.
“The Brooks Brothers brand is amazing,” a source told Yahoo! Finance. “It has more than 200 years of iconic heritage. Sure, it has to be shifted and adapted to modern times, but it’s an A-plus brand.”
“If ABG beats out the other interested parties to snap up Brooks Brothers, it is expected to mimic the strategy it used to purchase Forever 21 by teaming up with its mall developer partners Simon Property Group and Brookfield Property Partners,” said the site. “Under the terms of that deal, ABG and Simon each own 37.5 percent of the intellectual property and operating business, and Brookfield owns 25 percent.”
The potential Ascena Group bankruptcy was reported by several sources on Wednesday (July 8). In addition to Ann Taylor, the group owns seven other brands, including Loft and Lane Bryant. Its last official comment on the matter was in late May, when the company gave an update on its finances. Said Executive Chair Carrie Teffner at the time: “COVID-19 has significantly disrupted our business. Despite aggressive actions to preserve liquidity, the pandemic has significantly reduced our earnings and cash flow, resulting in increased levels of debt and deferred liabilities. With retail stores making up the majority of our revenue and cash flow, the uncertainty created by COVID-19 requires us to evaluate all options available to protect the business and its stakeholders.”
In other bankruptcy news, The Wall Street Journal reported that Pier 1 has found a potential buyer that is offering more than $20 million for the bankrupt company’s intellectual property and eCommerce business.
“The Fort Worth, Texas retailer has tapped Retail Ecommerce Ventures LLC to serve as the lead bidder, or stalking horse, to acquire Pier 1’s intellectual property, data and other assets related to the eCommerce business,” according to the WSJ. “The proposed buyer last year purchased the brand assets of Dressbarn and its eCommerce business from Ascena Retail Group Inc., the parent company of Ann Taylor and Lane Bryant.”