Guess what’s run out for Lucky Brand Dungarees? Cash on hand. The designer and retailer of denim jeans and other apparel “for the free thinker” has filed for bankruptcy in the District of Delaware and is closing 13 of its roughly 200 locations as it reorganizes. It also peddles wares at retailers including Macy’s, Nordstrom and Costco.
“The COVID-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers' return, the business has yet to recover fully,” Matthew A. Kaness, who was named interim CEO in September 2019 and also executive chairman in January 2020, states in the news release announcing the action.
“Debts of the Los Angeles-based business, which is owned by Leonard Green & Partners LP, include $182 million owed to lenders and $79 million to merchandise vendors, according to a filing Friday in U.S. Bankruptcy Court in Wilmington, Del.,” Becky Yerak reports for The Wall Street Journal.
“Sparc Group LLC is leading a proposed deal to buy the business, according to a declaration filed with the court by Mark A. Renzi, Lucky Brand’s restructuring chief. Sparc is an apparel company operating under the Aéropostale and Nautica brands owned by Authentic Brands Group LLC and Simon Property Group, one of Lucky’s key landlords, a court filing said,” Yerak adds.
“Renzi said the company has a backup bid, and Lucky asked the court to approve a bid process to see if there are better offers. The company anticipates a sale closing by mid-August. Renzi said Lucky was undermined by a shift among shoppers away from bricks-and-mortar stores, compounded by temporary store shut-downs due to the virus outbreak this spring,” according to an Associated Press story on NBC Los Angeles’ website.
“The chain was also hurt by limited liquidity, which made it harder to get new inventory from vendors. Renzi said some key venders began requiring payment on delivery or other new terms, adding to financial pressure on the company,” the AP adds.
“Started in 1990 in Los Angeles by Barry Perlman and Gene Montesano, Lucky Brand was founded with the aim to sell ‘great-fitting, vintage-inspired jeans,’ according to the company. The duo looked to a wide range of influences to craft its unique denim looks in a variety of washes and with rips, tears, and hardware that set it apart from its competitors…,” Bethany Biron writes for Business Insider.
“Though the company took off through the first decade of the new millennium, it struggled to evolve its style to keep up with fickle consumer demand and struggled through the Great Recession. Executive leadership changes also marred the brand as it fought an uphill battle to revitalize and resonate with shoppers amid the ongoing retail apocalypse,” Biron observes.
“These Ridiculously Comfy Lucky Brand Jeans Are Over 50% Off at Amazon Right Now,” read a headline in US Weekly a couple of weeks ago. “The looser leg gives these jeans a more easygoing feel than tighter denim, which is ideal for summer. They are still fitted throughout the thigh…,” Bernadette Deron explained.
Lucky is certainly not the only retailer feeling the pinch of COVID-19 and the underlying retail apocalypse.
“As many as 25,000 stores could shutter this year as businesses continue to feel the impacts of the pandemic, according to a recent report from Coresight Research. COVID-19 has hit retailers who were already in debt harder than others and bankruptcy filings have increased due to the pandemic with J.C. Penney, Neiman Marcus, Tuesday Morning, GNC and J. Crew filing for Chapter 11,” Kelly Tyko reports for USA Today.
“Other retailers, who haven’t filed for bankruptcy, also plan to shutter locations, including Victoria's Secret, Nordstrom and Signet Jewelers, parent company of Kay, Zales and Jared,” Tyko adds.
Nicolette Accardi, writing for NJ Advance Media on NJ.com, adds The Children’s Place, 24 Hour Fitness, Signet Jewelers, Zara, Nordstrom and Party City to the list of companies that have recently announced store closures.
As for Lucky, “the company is currently offering select items for up to 75% off online. You can also find a five-pack of face masks for $25,” Accardi reveals.