Diesel USA Plans To Restore Brand Through Bankruptcy

Amid shifting consumer buying habits and reported missteps internally, Diesel USA Inc. filed for bankruptcy. The jeans maker and retailer is looking to have court approval for its reorganization plan by mid-April, The Wall Street Journal reported.

Diesel Chief Restructuring Officer Mark Samson said in court papers, according to the news outlet, “The new management team has formulated a new strategic path over the next three years to restore the Diesel brand in the U.S., return the [company] to its prerecession profitability, ensure its ability to continue operating in the U.S., and preserve hundreds of jobs in addition to creating new ones through opening new stores.”

The retailer had been profitable for many years, but the company’s balance sheet was impacted by the recession in 2008. And the executive said, per the report, that the company wasn’t able to recover even with improvements that started in 2011. At the same time, evolving consumer behavior is said to have impacted the company. And a failed restructuring out of court as well as the decision of management to go into new leases “worsened [Diesel’s] problems in the long-term rather than solve them,” Samson told the paper.

The news comes as the growth of denim has slowed in recent years, with consumers choosing sweatpants, yoga pants or premium brands. The outlet, however, reported that Levi Strauss & Co. is “one exception.” Last year, for instance, it was reported that jeans are getting a high tech — and environmentally sound — upgrade, thanks to the magic of lasers at Levi.

The Levi’s brand can scratch, cut, weather and sand a new and immaculate pair of 501s so that they look a whole lot less new by using lasers. The strategy, which is dubbed Project F.L.X., is designed to allow consumers to customize their own ideally and uniquely distressed finish on their jeans. In addition, it was said that lasers are much cheaper to deploy than older methods while cutting out nearly all of the chemicals and much of the manual labor.