According to The Street, Maintaining demand for clothing styles is essential for the success of retail apparel companies. However, the Covid-19 pandemic dealt a devastating blow to many clothing retailers, leading to widespread store closures, supply chain disruptions, a decline in brick-and-mortar shopping, and a shift from office attire to more casual styles for those working from home.
Bankruptcy Filings Amid the Pandemic
The list of clothing retailers filing for bankruptcy due to the pandemic in 2020 was extensive. Notable companies that filed Chapter 11 and closed stores included Brooks Brothers, New York & Company, Men’s Wearhouse and its parent company, Tailored Brands, and J. Crew. Additionally, several department stores heavily reliant on clothing sales, such as J.C. Penney, Neiman Marcus, Lord & Taylor, and Stein Mart, also succumbed to the financial pressures exacerbated by Covid-19.
Recent Developments: Rue 21 and Salt Life
More recently, Rue 21, a mall-based teen clothing retailer, filed for Chapter 11 bankruptcy in May and subsequently shut down all 540 of its locations nationwide. The industry continues to grapple with reduced demand for office attire as remote work remains prevalent, alongside rising costs for labor and materials. In 2022, apparel makers faced a surge in cotton prices, which further increased operational costs, cut into revenue, and diminished liquidity.
Liquidation of Salt Life
Now, the struggling casual apparel chain Salt Life is set to liquidate and close its 28 remaining stores across 10 states. This decision comes after brand management company Iconix International and liquidator Hilco Consumer-Retail Group acquired the retailer in the Delta Apparel bankruptcy case. In a statement released on September 24, the companies announced their plans to transition the Salt Life brand to a wholesale and e-commerce business model following the liquidation.
Founded in Jacksonville Beach, Florida, in 2003, Salt Life began its liquidation sales on September 20, just four days after U.S. Bankruptcy Court Judge Laurie Selber Silverstein signed an order approving Iconix and Hilco’s acquisition of the retail chain. The successful bidders acquired the Salt Life assets for $38.74 million at a virtual auction held on August 27.
Details of the Liquidation Process
The organized wind-down of Salt Life’s stores will unfold over the next few months, encompassing all inventory in stores and distribution centers, as well as furniture, fixtures, and equipment. The stores will offer discounts of up to 40% on items such as t-shirts, shorts, performance clothing, and tumblers.
Customers can use gift cards for the first 30 days of the sale, but acceptance will cease on October 20, 2024. Returns for merchandise purchased before September 20 will also be accepted within the initial 30 days, ending on the same date. However, all purchases made on or after September 20 will be considered final.
Hilco will manage the sale of inventory from distribution centers through a streamlined wholesale process. Salt Life’s former parent company, Delta Apparel, filed for Chapter 11 protection on June 30, seeking a sale of its assets after experiencing decreased demand for its products and challenges in sourcing raw materials, which led to a decline in liquidity and difficulties in securing capital for operations.
