Category: RETAIL

Mall operators collected only 15% of April rent …

retail sales

Tapestry Inc (TPR.N) Chief Executive Officer Jide Zeitlin has been negotiating lower rents for the company’s Coach and Kate Spade stores for more than a month, using the brands’ power to draw in U.S. mall traffic as leverage in tough talks with landlords.

The company, whose handbags have won it a place among the big names of the fashion world, is just one of a raft of major U.S. retailers seeking to lower rent bills to make sure they have enough cash to weather the COVID-19 pandemic.

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Neiman Marcus, J. Crew, and True Religion are among the first US retailers to file for bankruptcy as the pandemic takes its toll. Here’s the full list so far.

The retail sector is currently facing one of its most challenging periods in history as stores and restaurants stay closed and the future of retail remains uncertain.

Many brick and mortar retailers and restaurants that were experiencing troubles heading into the crisis are now being forced to shutter locations or lay off workers in order to stay afloat as their business almost entirely dries up.

Others are left with no choice but to file for bankruptcy, and experts say we can expect to see many more follow in their lead as the pandemic continues to decimate the industry.

Here’s who has filed for bankruptcy so far:

Continue reading “Neiman Marcus, J. Crew, and True Religion are among the first US retailers to file for bankruptcy as the pandemic takes its toll. Here’s the full list so far.”

Lord & Taylor reportedly prepping to liquidate

Dive Brief:

  • When Lord & Taylor’s 38 stores reopen after pandemic-related restrictions ease, they may be running liquidation sales ahead of shuttering permanently. Reuters reported the news on Tuesday, citing unnamed sources.
  • The department store, now owned by online apparel rental company Le Tote, is delaying a bankruptcy filing in order to make the most of such sales, but has been in touch with liquidators, according to the report. A company spokesperson declined to comment to Retail Dive on the news.
  • Hudson’s Bay Co., which last August sold Lord & Taylor to Le Tote for $100 million, held on to some real estate in that deal and may take advantage of a bankruptcy to reassume some leases, Reuters said.

Dive Insight:

The COVID-19 pandemic has been rough on consumer-facing businesses, and fragile retailers like Lord & Taylor are especially at risk.

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Neiman Marcus files for Chapter 11 bankruptcy protection

Neiman Marcus, the 112-year-old storied luxury department store chain, has filed for Chapter 11 bankruptcy protection, the first department store chain to be toppled by the coronavirus pandemic.

The move, announced Thursday, follows the bankruptcy filing by J.Crew, which became the first major retailer to reorganize during the pandemic. Experts believe there will be more to come even as there are moves to reopen businesses in parts of the country like Texas and Florida.

“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” said Neiman Marcus Group CEO Geoffroy van Raemdonck in a statement. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”

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Nordstrom permanently closing 16 full-line stores…

Photo Credit: Phillip Pessar

Nordstrom plans to permanently close 16 of its 116 full-line stores while moving toward a phased reopening of others, as it tailors its immediate future to the realities of retail in the coronavirus pandemic.

The Seattle-based company also said it will make changes to how its stores function in a “market-by-market” approach, and will move its big Anniversary Sale from July to August.

Shuttering one out of seven stores is not simply a response to the pandemic, said Neil Saunders, managing director of GlobalData Retail.

“This coronavirus crisis is the catalyst rather than the cause,” he said. “Not all of its full-line stores pull their weight. … Some have probability that is dwindling. They’re saying, ‘Look, we don’t see a future in these stores, let’s cut our losses.’”

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J. Crew files for Chapter 11 bankruptcy…

Photo Credit: Raysonho

Even as some retailers begin to open stores again, the pain across malls and main streets continues to take its toll.

J. Crew Group Inc. on Monday said it would begin pre-arranged Chapter 11 bankruptcy proceedings and enter into a $1.65 billion debt-for-equity swap with its lenders, becoming the first major U.S. retailer to succumb to the economic convulsions caused by the coronavirus pandemic. It won’t be the only casualty.

Other chains are grappling with the same issues: heavy debt loads, compounded by the damage done from locations closed for weeks. Neiman Marcus Group Inc. is closing in on a bankruptcy deal with a group of lenders, Bloomberg News reported on Monday, citing people with knowledge of the matter, and J.C. Penney Co. is reportedly in talks on a loan that would fund it through a restructuring. Meanwhile, Victoria’s Secret-owner L Brands Inc. said late Monday that it agreed to terminate plans to sell a majority stake in the lingerie chain to private equity firm Sycamore Partners. Jefferies analyst Randal Konik had warned last month of potential medium-term solvency issues at L Brands after Sycamore sued to get out of the transaction, citing a collapse in sales and looming debt maturities.

Every brand has its own story. In the case of J. Crew, it was one of the first mainstream U.S. retailers to gain real traction with the fashion crowd, and in its heyday was also ahead of its time in areas such as store design. The leadership of former chief executive Mickey Drexler and creative director Jenna Lyons took its preppy styles from classic to cutting edge, all helped by the brand being a favorite of Michelle Obama. But its trendy designs eventually alienated some customers, and when the power partnership came to an end in 2017, it never regained its stride. With cheaper competitors such as Inditex’s Zara and a resurgent Ralph Lauren Corp at the top end, J. Crew had to rely on incessant discounting.

J. Crew had hoped in recent months to spin off its faster-growing, denim-focused  Madewell arm as it sought to cut borrowings of almost $1.7 billion as of February. But plans for the initial public offering were scuppered by the pandemic, and it was left struggling to deal with its debt, a legacy from its 2011 leveraged buyout by TPG Capital LP and Leonard Green & Partners LP.


Saks Fifth Avenue Is Latest Mall Anchor To Prepare For Bankruptcy Filing

Macy’s, JCPenney, Neiman Marcus, and now Saks Fifth Avenue: in just a few weeks, the four core pillars and anchor tennants of the US mall sector will file for bankruptcy.

While we previously reported that the former two retail icons had entered their bond grace period ahead of filing a formal Chapter 11 bankruptcy petition, on Wednesday afternoon Bloomberg reported that Hudson’s Bay Co had also missed its April payments on at least two commercial mortgage-backed securities that were part of $696 million in financing for Saks Fifth Avenue and other stores.

The securities, originated in 2015, were current until this month when the company missed interest-only debt payments totaling only $3.2 million, according to data compiled by Bloomberg and a person familiar with the matter. According to Bloomberg, the missed payments were on securities that financed 34 properties – 10 Saks and 24 Lord & Taylor stores. The Saks locations include Beverly Hills, California, Atlanta, Chicago and Miami.

Demonstrating the shock to the retail sector over the past month, almost 11% of retail CMBS loans were as much as 30 days delinquent this month, up from 1.7% in March, according to an April 23 report by the CRE Finance Council, a commercial real estate trade group.