Lord & Taylor, Tailored Brands file for bankruptcy
Two more retail icons have filed for Chapter 11 protection, joining more than a dozen major brands that have tipped into bankruptcy as pandemic-fueled store closures sent sales plummeting.
Lord & Taylor, the nation's oldest department store chain, filed for bankruptcy protection on Sunday and said it is searching for a buyer. Hours later, Tailored Brands, the parent company of Men's Wearhouse and Jos. A. Bank, followed suit, saying the pandemic had forced a reckoning. The company recently announced it would lay off 20 percent of its corporate workforce and close as many as 500 stores to cut costs.
The companies join such clothes sellers as J. Crew, Neiman Marcus, J.C. Penney and Brooks Brothers in bankruptcy court. Apparel sales have nosedived during the pandemic as millions of workers lost jobs or shifted to working from home, while social gatherings such as weddings or parties were canceled or reimagined through digital platforms like Zoom in the name of social distancing.
"The global pandemic, combined with a very difficult economy, has exacerbated what has already been a difficult time for mall-based apparel retailers," said David Silverman, an analyst for Fitch Ratings. "For a lot of these companies, the pandemic was the final straw."
That was certainly the case for Lord & Taylor, the once-storied institution founded in New York in 1826. In recent years, it has fallen out of touch with high-end customers and younger shoppers. Le Tote, the clothing rental start-up that acquired Lord & Taylor in November for about $100 million, also filed for Chapter 11 protection on Sunday.
Neither company responded to requests for comment. But in a full-page ad Monday in The Washington Post, Lord & Taylor said the pandemic had placed "an unprecedented strain" on the business. It said there would be no immediate changes to its website, store credit card or gift card policies during bankruptcy proceedings.
"This strategy is part of our fierce commitment to preserve a nearly 200-year-old brand," the company said in the ad.
Lord & Taylor has about 40 stores nationwide, many of them in shopping malls. Its filing comes weeks after two other department store chains - Neiman Marcus and J.C. Penney - filed for Chapter 11 protection. The pandemic wreaked havoc on already struggling retailers, temporarily shuttering thousands of stores and leading to furloughs for more than 1 million workers since mid-March.
Lord & Taylor was founded by two English immigrants, Samuel Lord and George Washington Taylor, who sold high-end women's clothing and accessories in Manhattan's Lower East Side. The retailer, which became known for luxury fashions and home goods, expanded throughout New York in the subsequent decades. Dorothy Shaver, a 20-year company veteran, took over as president in 1945, becoming the first woman in the country to lead a multimillion-dollar corporation. She led Lord & Taylor's expansion into the suburbs and started its personal shopping program.
But the company didn't venture beyond its northeastern roots until the 1970s and 1980s, when it began rapidly expanding into major cities such as Atlanta, Houston, Dallas and Miami, making it a high-end household name across the country.
In recent years, though, Lord & Taylor struggled to keep up with growing competition from online luxury start-ups and lower-priced rivals. Many of its stores, which were located in shopping malls, languished as well-heeled Americans shifted their buying to boutiques and e-commerce brands. In 2017, Lord & Taylor sold its flagship store on New York's 5th Avenue to WeWork and began shutting down about a dozen underperforming stores.
Le Tote had hoped to revive the flagging company by adding makeup subscriptions, try-on boutiques and other services aimed at busy millennials. But then the pandemic hit, putting the brakes on its plans and forcing it to reconsider its future as consumer spending plummeted in just about every category, including apparel, jewelry and home goods.
It was a similar story at Tailored Brands, where executives said the pandemic left them with little choice but to file for bankruptcy. The Fremont, Calif.-based retailer, which also owns K&G and Moores, said sales had slowed at its 1,400 stores as demand dried up for suits, button-downs and slacks.
"The unprecedented impact of COVID-19 requires us to further adapt and evolve," Dinesh Lathi, the company's chief executive, said in a news release.
The specialty menswear retailer said it will still honor customer gift cards and rewards, and fill rental reservations and custom orders in its stores. It also said it will continue paying its 18,000 workers and providing health benefits.
In filings, Tailored Brands said it had more than $2.8 billion in debt against more than $2.4 billion in assets. Lord & Taylor, meanwhile, said it had $100 million to $500 million in both assets and liabilities.
Analysts say they expect more distressed retailers to file for bankruptcy in coming weeks, as the pandemic continues to put pressure on both consumers and businesses.
"The cadence has been one major bankruptcy filing a week and I don't see that slowing until we're over the pandemic," said Sucharita Kodali, an analyst for Forrester. "These retailers were already in trouble - department stores have been on a downward slide since 2000 - and now you layer in the fact that revenue is plummeting."
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