BIG UPDATE: Bankrupt clothing retail chain liquidates, closes all stores
According to The Street, Maintaining demand for clothing styles is essential for the success of retail apparel companies. However, the COVID-19 pandemic had a devastating effect on clothing retailers, leading to numerous challenges, including store closures, supply chain disruptions, declining brick-and-mortar shopping, and a notable shift away from office attire to more casual styles as many adapted to working from home.
Bankruptcy Trends in the Apparel Sector
The pandemic prompted a long list of clothing retailers to file for bankruptcy in 2020. Notable companies that entered Chapter 11 and closed stores include Brooks Brothers, New York & Company, Men’s Wearhouse, the parent company of Jos. A. Banks (Tailored Brands), and J. Crew. Several department stores heavily reliant on clothing sales also succumbed to bankruptcy, including J.C. Penney, Neiman Marcus, Lord & Taylor, and Stein Mart.
More recently, mall-based teen clothing retailer Rue 21 filed for Chapter 11 bankruptcy in May, leading to the shutdown of all 540 of its locations nationwide.
Impact of Rising Costs
In addition to reduced demand for office attire, the apparel industry has faced rising costs for labor and materials. In 2022, many apparel makers experienced a surge in cotton prices, which strained revenues and reduced liquidity.
Salt Life’s Liquidation Plans
In a recent development, struggling casual apparel chain Salt Life announced plans to liquidate and close its 28 remaining stores across 10 states. This decision came after brand management company Iconix International and liquidator Hilco Consumer-Retail Group completed the acquisition of the retailer’s assets during the Delta Apparel bankruptcy case, as stated in a press release on September 24.
Transitioning to a New Business Model
Iconix and Hilco plan to transition the Salt Life brand from retail 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 Judge Laurie Selber Silverstein signed an order on September 16 in the U.S. Bankruptcy Court for the District of Delaware, approving the sale.
The successful bidders, Iconix and Hilco, acquired Salt Life’s assets for $38.74 million during a virtual auction on August 27. The organized wind-down of Salt Life stores is expected to be completed over the next few months and will include the sale of all inventory in stores and distribution centers, along with furniture, fixtures, and equipment. Customers can expect discounts of up to 40% on a range of products, including t-shirts, shorts, performance clothing, hoodies, and tumblers.
Important Sale Details
Gift cards will be accepted for the first 30 days of the liquidation sale, ceasing acceptance on October 20, 2024. Merchandise returns for items purchased before September 20 will also be accepted during the first 30 days, with returns ending on the same date. All purchases made on or after September 20 will be considered final.
Hilco will oversee 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. This decision followed reduced demand for its products and challenges in obtaining raw materials for manufacturing, which ultimately led to a decline in liquidity. Delta Apparel also faced difficulties in raising capital to fund its operations.
