Bankrupt clothing retail chain liquidates, closes all stores
According to The Street, Maintaining demand for clothing styles is crucial for the success of retail apparel companies. However, the Covid-19 pandemic had a devastating impact on this sector, leading to widespread store closures, supply chain disruptions, and a significant shift in consumer preferences. As remote work became the norm, demand for office attire plummeted in favor of more casual styles.
Bankruptcy Wave During the Pandemic
The fallout from the pandemic in 2020 resulted in a lengthy list of clothing retailers filing for bankruptcy. Notable companies such as Brooks Brothers, New York & Company, Men’s Wearhouse parent Tailored Brands, and J. Crew all filed for Chapter 11 and closed stores. The pandemic’s repercussions extended to several department stores that rely heavily on clothing sales, including J.C. Penney, Neiman Marcus, Lord & Taylor, and Stein Mart.
Recent Closures and Financial Challenges
More recently, the mall teen clothing retailer Rue 21 filed for Chapter 11 bankruptcy in May, leading to the shutdown of all 540 of its locations nationwide. The apparel industry continues to grapple with rising labor and material costs, exacerbated by a surge in cotton prices in 2022. This increase strained profitability and liquidity for many apparel manufacturers.
In a significant development, casual apparel chain Salt Life announced plans to liquidate and close its 28 remaining stores across ten states. This decision follows the acquisition of the retailer by brand management company Iconix International and liquidator Hilco Consumer-Retail Group during Delta Apparel’s bankruptcy case.
Liquidation Process for Salt Life
Salt Life, founded in Jacksonville Beach, Florida, in 2003, began its liquidation sales on September 20, shortly after Judge Laurie Selber Silverstein approved Iconix and Hilco’s acquisition on September 16 in the U.S. Bankruptcy Court for the District of Delaware. The assets were sold for $38.74 million during a virtual auction held on August 27.
The liquidation will be conducted in an organized manner over the coming months, encompassing all inventory from stores and distribution centers, as well as furniture, fixtures, and equipment. Discounts of up to 40% will be offered on items like t-shirts, shorts, performance clothing, hoodies, and tumblers.
Gift cards will be accepted for the first 30 days of the sale but will no longer be valid after October 20, 2024. Additionally, returns for merchandise purchased before September 20 will be accepted during the initial 30 days, with the return period ending on October 20. All purchases made on or after September 20 will be final.
Hilco will also manage the sale of inventory from distribution centers through a streamlined wholesale process.
Delta Apparel’s Chapter 11 Filing
Salt Life’s former parent company, Delta Apparel, filed for Chapter 11 protection on June 30, seeking a sale of its assets. The decision came after the company faced declining demand for its products and difficulties in obtaining raw materials, which negatively impacted its liquidity and ability to raise capital for ongoing operations.
As the apparel retail industry navigates these challenging times, the closures and bankruptcies highlight the need for adaptability and a keen understanding of changing consumer preferences.
