Covid-19 has caused yet another fashion house to file for Chapter 11 bankruptcy: Lucky Brand Dungarees, LLC, currently owned by Leonard Green & Partners LP and best known as Lucky Brand Jeans, Business Insider reports. The retailer is hoping to sell to SPARC Group LLC, parent company of Aéropostale and Nautica, for $140.1 million in cash and $51.5 million in credit. According to NBS Los Angeles, Lucky will shutter at least 13 stores during bankruptcy. If only they could hold out until the low-rise denim trend of the ’00s returns in full force.
“The COVID-19 pandemic has severely impacted sales across all channels. While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully,” Matthew A. Kaness, interim CEO and executive chairman of Lucky Brand wrote in a statement. “We have made many difficult decisions to preserve the Company’s viability during these unprecedented times. After considering all options, the Board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success. We remain committed to our Associates, vendors, and business partners and appreciate the continued support through this process.”
In an interview with TODAY, UBS apparel analyst Jay Sole explained that by filing for Chapter 11 bankruptcy, brands like Lucky Brand Dunagrees will likely survive in some capacity, but that does require a sale. “It’s not that the companies are not popular, it has to do with the way the finances were structured. Many have been forced to borrow a lot of money and suddenly, due to COVID, they can’t pay their debts,” he said. “It’s an issue of profitability.”
Since the covid-19 pandemic caused store closures across the globe in Spring 2020, a handful of retailers have been forced to file for bankruptcy, including J.Crew, Neiman Marcus, David’s Bridal and J.C. Penney. I could wager a guess as to what this means for the future of outlet malls, but when is the last time anyone went to an outlet mall?