Luxury apparel brand files for Chapter 11 bankruptcy
According to The Street, The luxury fashion retail industry has not been immune to the challenges faced by other sectors in 2024. Rising inflation, increasing interest rates, and lingering effects of the Covid-19 pandemic have put significant pressure on many luxury retailers. Additionally, issues such as keeping brick-and-mortar stores relevant and battling shrinkage (retail theft) have further complicated the industry’s financial outlook.
Ted Baker and Anne Fontaine Hit by Financial Woes
Earlier this year, luxury fashion experienced notable losses. Ted Baker Canada, a high-end apparel chain, filed for restructuring under Canada’s Companies’ Creditors Arrangement Act and for Chapter 15 bankruptcy in the U.S. in April 2024. The chain, which operated 31 Ted Baker stores in the U.S., 25 in Canada, eight Brooks Brothers Canada shops, and seven Lucky Brand Canada stores, chose to liquidate and close all of its North American locations.
Also read: Popular Italian restaurant chain files for Chapter 11 bankruptcy
Similarly, Anne Fontaine USA, the U.S. branch of the Paris-based luxury boutique chain, filed for Chapter 11 Subchapter V bankruptcy protection in January. Despite efforts to reorganize, the company stated that the financial distress caused by the Covid-19 pandemic had been too difficult to overcome. Anne Fontaine operates 17 luxury boutiques in the U.S. and several others across Europe, the Middle East, and Asia.
McMullen Files for Chapter 11 Amid Legal Battle
Adding to the luxury fashion industry’s struggles, Oakland-based retailer McMullen filed for Chapter 11 bankruptcy on August 21, 2024, in the U.S. Bankruptcy Court for the Northern District of California. The filing followed a lawsuit by online competitor Moda Operandi, which accused McMullen of copyright infringement over product photos.
In its bankruptcy petition, McMullen reported assets ranging from $500,000 to $1 million and liabilities between $1 million and $10 million, indicating that funds would be available for unsecured creditors. The lawsuit from Moda Operandi, filed on August 7, alleged that McMullen had used copyrighted images of skirts, dresses, tops, pants, sweaters, and jackets without consent. Moda Operandi attached 19 copyrighted images to its complaint and is seeking damages to be established at trial. The plaintiff has also requested that McMullen be enjoined from using the images.
While litigation against McMullen is subject to an automatic stay due to its bankruptcy filing, the fashion retailer faces significant financial and legal hurdles.
McMullen’s Legacy and Future Uncertainty
Founded in 2007 by Sherri McMullen, the luxury retailer has garnered praise from top fashion magazines like Vogue, Women’s Wear Daily, and Harper’s Bazaar. McMullen is known for offering high-end women’s apparel from designers like Christopher John Rogers, Dries Van Noten, The Row, and Diotima. The retailer also offers luxury men’s clothing from Dries Van Noten.
Also read: Another craft beer, restaurant chain files Chapter 11 bankruptcy
Despite its financial challenges, McMullen expanded its presence in 2024, opening a second boutique in the Presidio Heights district of San Francisco on August 12. The company also operates an e-commerce platform, though its future remains uncertain as it navigates bankruptcy and legal disputes.
