RTW Retailwinds, the New York City-based owner of New York & Co., filed for Chapter 11 bankruptcy in New Jersey yesterday. While its bricks-and-mortar stores have been reopening of late, the retailer says it expects to close a significant portion -- if not all -- of them, and it may sell its ecommerce operation.
New York & Co. also sells branded merchandise under the names Fashion to Figure and Happy x Nature and has collaborations with Eva Mendes, Gabrielle Union and Kate Hudson. It is evaluating the sale of its ecommerce business and the intellectual property of its brands.
“The combined effects of a challenging retail environment coupled with the impact of the coronavirus (COVID-19) pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future,” RTW Retailwinds CEO and CFO Sheamus Toal states in the release announcing the action.
Toal, who had been named CFO and COO in 2018 after more than a decade at the company, took over as CEO in April when Traci Inglis, who had been president, chief marketing and customer officer, resigned just before assuming the position, as Daphne Howland reported for Retail Dive.
Founded in 1918 as as Lerner Shops, New York & Co. operates 378 retail and outlet locations in 32 states and employs about 4,500 workers. It has been public since 2004. Trading of the company’s common stock on the New York Stock Exchange was suspended last week.
“While its struggles have mounted amid the current health crisis, RTW Retailwinds’ problems predate COVID-19. For the 2019 fiscal year, it reported a 7.4% dip in revenues to $827 million. Profits dropped from $4.2 million ($0.06 per share) in the prior year to a loss of $61.6 million, or 96 cents per share. Comparable store sales were down 5.4%,” Ella Chochrek wrote for Footwear News last week when it reached an agreement with Wells Fargo to enter forbearance on a loan until July 15.
“With the shift toward working from home, buying work clothes has fallen out of fashion, jeopardizing the futures of companies that depend on office attire including Brooks Brothers, Ann Taylor's owner Ascena, and Tailored Brands,” Jordan Valinsky observes for CNN Business.
“RTW is the latest mall retailer to see its fortunes dwindle because of the pandemic and shifting consumer tastes. Sur La Table, J.Crew, JCPenney, Brooks Brothers and Muji have all filed for bankruptcy in recent weeks and warned of significant store closures and job cuts,” Valinsky adds.
“Most New York & Co. stores are in shopping malls, which poses its own set of challenges since they were struggling even before the pandemic as consumers shifted more of their spending online and to discount stores outside of malls,” Tory N. Parrish writes for Newsday.
“Department stores and apparel chains, which are among the most vulnerable sectors, represent 14 of the top 20 occupants of U.S. mall space,” according to Coresight Research, a Manhattan-based retail analysis provider,” Parrish continues.
“There will be a record 20,000 to 25,000 store closures in the United States in 2020, topping last year’s record of about 9,820 closings, as many retailers that were temporarily closed to help stop the spread of the virus this year will not reopen, according to Coresight. At least 55% of the permanent closings this year will be at malls, Coresight said,” Parrish adds.
“‘There’s not really much that retailers can do,’ said Forrester Research analyst Sucharita Kodali. Bricks-and-mortar apparel brands face a tremendous competition from online sellers, and many companies have been slow to adapt to changing consumer tastes, like the popularity of athleisure, she said,” Hamza Shaban writes for The Washington Post
“The U.S. economic recovery is expected to last beyond this year, setting up a disappointing holiday season for many businesses. ‘This is a story that we are seeing in a lot of different industries,’ she said,” Shaban adds.