Report: Teen apparel retailer close to filing Chapter 11
April 21, 2016 | By Marianne Wilson
Aeropostale Inc. preparing to file for Chapter 11 bankruptcy as soon as this month, Bloomberg reported, citing people familiar with the matter.
Aeropostale has recorded three consecutive years of losses as its struggles to deal with a teen audience whose spending tastes now favor fast-fashion giants such as H&M as well as online retailers. The chain operates some 800 stores nationwide.
In March, Aeropostale announced plans to evaluate strategic alternatives, including a sale of the company. And last week it said it was delaying the filing of its annual report while it explores its options.
Pressured by newer entrants like H&M and Forever 21, Aeropostale files for bankruptcy protection
Nathan Bomey and Hadley Malcolm, USA TODAY 4:06 p.m. EDT May 4, 2016
If you're a teenager shopping for clothes, you're probably not going to Aeropostale, a fact that became glaringly obvious when the apparel retailer filed for Chapter 11 bankruptcy protection Wednesday.
Fast-fashion brands such as H&M and Forever 21 have put major pressure on the teen retail landscape, upending companies like Aeropostale, which long relied on churning out inexpensive and logo-emblazoned polos and T-shirts whose most fashionable attribute was being able to buy them in a different color. And the company faced a tough proposition in trying to remake itself as a fashion brand when it's been primarily known as a place that sells cheap clothes, retail analysts say.
Now, the company will move quickly to close 113 of its 739 U.S. stores and all 41 of its stores in Canada. Aeropostale expects to use bankruptcy protection to shed debts and restructure its business, remaining in business but likely culminating in a sale of the company.
Ultimately, bankruptcy is only a temporary fix for a brand that needs to redefine its value to customers, says Neil Saunders, CEO of retail analytics firm Conlumino.
"It buys them some breathing space," he says. "What it needs really is a brand reinvention."
Aeropostale's sales have been falling drastically in recent years, declining 18% in 2015. When the company reported full-year earnings results in March, it said it expected to have a loss between $24 million and $29 million in the first quarter this year.
Compared with its traditional teen competitors American Eagle Outfitters and Abercrombie & Fitch, it's been slower to streamline the business and close poorly performing stores, Saunders says. Instead, stores became crowded with old merchandise that failed to sell. Making things worse, new products never appeared too different from past collections.
The brand lost its competitive edge as other stores started rising through the retail ranks with more fashionable items at a better value, says Simeon Siegel, an analyst with Nomura Securities International.
"If your reason for being is simply a cheap price and someone can do it better than you can, then that’s not going to be a good enough reason," says Siegel, who expects more store closures in Aeropostale's future as it attempts to become profitable again.
The retailer said it had secured $160 million in bankruptcy financing from Crystal Financial LLC to keep its doors open and continue paying employees while it navigates bankruptcy.
Aeropostale has about 14,500 employees in all 50 states, Puerto Rico and Canada. It also has 25 P.S. from Aeropostale stores in 12 states and licenses its brand to more than 300 stores in 17 countries. The company has not said when stores will close or how many employees will be affected. Liquidation sales are expected to start as early as May 7.
The company listed $354 million in assets and $390 million in debts in its bankruptcy petition.
The bankruptcy filing comes after a dispute between Aeropostale and one of its largest suppliers, MGF Sourcing, a division of Sycamore Partners, which demanded cash on delivery as the retailer's finances deteriorated, according to a court filing.
"The ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans," Aeropostale CEO Julian Geiger said in a statement. "As a result, we have chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today's retail environment."
Aeropostale's bankruptcy follows the recent Chapter 11 filings of competitors such as Pacific Sun, American Apparel and Wet Seal. In a court filing, Chief Financial Officer David Dick attributed the company's ailing performance to a variety of factors, including "declining mall traffic, a highly promotional and competitive teen retail environment, and a shift in customer demand away from apparel to technology and personal experiences."
Department store chain Macy's launched Aeropostale as a private label brand in the early 1980s and opened the first Aeropostale standalone stores in 1987. The chain was sold along with other Macy's specialty stores in 1998 to Aerospostale executives and other investors. The company went public in 2002.
Will your Aeropostale close? Here's the list
Nathan Bomey, USA TODAY 9:54 a.m. EDT May 4, 2016
Aeropostale plans to close 113 U.S. stores and all 41 Canada stores as part of its Chapter 11 bankruptcy.
The fashion retailer is exiting certain markets altogether, including Alaska and Hawaii, according to a court filing. The closures include its Times Square location.
Aeropostale said 117 of the stores set to close are not profitable and were responsible for $17 million in losses in 2015, according to a court filing. The other closing stores "experienced poor or negative sales trends and no longer fit within the debtors’ business plan," according to the filing.
The company expects to glean about $21 million in revenue from the liquidation sales, which will last about six to eight weeks, according to the filing.
U.S. liquidation sales are set to begin as early as May 7, while Canadian liquidation sales are set to begin the week of May 9.
The company has some 739 stores in all 50 states and Puerto Rico, 41 stores in Canada and 25 P.S. from Aeropostale stores in 12 states. It also licenses its brand to 322 foreign stores.
Below is a state-by-state list of Aeropostale stores set to close, pending a federal bankruptcy judge's approval, according to a court filing. The list could grow if Aeropostale is unable to restructure its debts expeditiously.
Alabama
Spanish Fort: Eastern Shore Center
Birmingham: Pinnacle at Tutwiler Farm
Alaska
Anchorage: Dimond Center
Anchorage: Anchorage 5th Ave
Fairbanks: Bentley Mall
Arizona
Scottsdale: Scottsdale Fashion Square
Tuscon: Foothills Mall
Arkansas
Little Rock: Park Plaza Mall
Hot Springs National Park: Hot Springs Mall
Rogers: Pinnacle Hills
California
San Jose: Oakridge Mall
Chula Vista: Town Center at Otay Ranch
Los Angeles: Westside Pavilion
Citrus Heights: Sunrise Mall
Chico: Chico Mall
Colorado
Lakewood: Bel Mark
Grand Junction: Mesa Mall
Silverthorne: Outlets of Silverthorne
Connecticut
Waterford: Crystal Mall
Florida
Sarasota: Sarasota Square
Beach: Indian River Mall
Miami: Shops at Sunset Place
Orlando: West Oaks Mall
Estero: Coconut Point
Palm Beach: The Gardens Mall
Georgia
Athens: Georgia Square Mall
Lithonia: Mall at Stonecrest
Macon: Shoppes at River Crossing
Hawaii
Honolulu: Ala Moana Center
Kaneohe: Windward Mall
Aiea: Pearl Ridge Mall
Idaho
Twin Falls: Magic Valley
Chubbuck: Pine Ridge Mall
Illinois
Springfield: White Oaks Mall
Carbondale: University Mall
Geneva: Geneva Commons
Bolingbrook: Promenade at Bolingbrook
Forsyth: Hickory Point
Bourbonnais: Northfield Square
Indiana
Bloomington: College Mall
Wayne: Jefferson Pointe Mall
Kentucky:
Paducah: Kentucky Oaks Mall
Elizabethtown: Mall Towne Mall
Owensboro: Town Square Mall
Louisiana
Monroe: Pecanland
Slidell: Northshore Square
Maryland
Glen Burnie: Marley Station
Ocean City: Ocean City Outlets
Massachusetts
Worcester: Greendale Mall
Michigan
Muskegon: The Lakes Mall
Fort Gratiot: Birchwood Mall
Jackson: Westwood Mall
Traverse City: Grand Traverse
Howell: Tanger Outlet Center Howell
Minnesota
Maplewood: Maplewood Mall
Blaine: Northtown Mall
Woodbury: Woodbury Lakes
Coon Rapids: Riverdale Village
Mississippi
Southaven: Southaven Towne Center
Flowood: Dogwood
Missouri
Columbia: Columbia Mall
Kansas City: Zona Rosa
Branson: Branson Landing
Montana
Missoula: Southgate Mall
Nebraska
Lincoln: Gateway Mall
Omaha: Oak View Mall
Nevada
Las Vegas: Town Square Las Vegas
North Carolina
Asheville: Asheville Mall
New Mexico
Santa Fe: Fashion Outlets of Santa Fe
New York
Amherst: Boulevard Mall
Clay: Great Northern Mall
Buffalo: McKinley Mall
Brooklyn: Fulton Street
New York: Times Square
Ohio
Clairsville: Ohio Valley Mall
Cincinnati: Tri-County Mall
Cincinnati: Eastgate Mall
Heath: Indian Mount Mall
Zanesville: Colony Square
Youngstown: Southern Park Mall
Akron: Summit Mall
Niles: Eastwood Mall
Columbus: Eastland Mall
Oklahoma
Norman: Sooner Fashion Mall
Oklahoma City: Quail Springs
Shawnee: Shawnee Mall
Pennsylvania: Monroeville: Monroeville Mall
Moosic: Shops at Montage
Chambersburg: Chambersburg Mall
South Carolina
Columbia: Village at Sandhill
South Dakota
Rapid City: Rushmore Mall
Tennessee
Chattanooga: Northgate Mall
Cleveland: Bradley Square
Memphis: The Avenue Carriage Crossing
Kingsport: Fort Henry Mall
Texas
Plano: Willowbend
Houston: West Oaks Mall
Hillsboro: Prime Outlets Hillsboro
Lake Jackson: Brazos Mall
San Antonio: Village at Stone Oak
San Angelo: Sunset Mall
Virginia
Christiansburg: New River Malley
Chesapeake: Chesapeake Square
Washington state
Bellingham: Bellis Fair Mall
Bellevue: Bellevue Square
West Virginia
Bluefield: Mercer Mall
Wisconsin
Wausau: Wausau Center
Fond Du Lac: Forest Mall
Wyoming
Casper: Eastridge Mall
Quote from: dmx10101 on May 04, 2016, 06:36:54 PM
Ohio
Cincinnati: Tri-County Mall
Cincinnati: Eastgate Mall
Two of my local ones, that's a shame.
Hasn't been a very good year (or thereabouts) for retail on Times Square, has it?
Can't say I'm surprised by the Greendale Mall store in Worcester, MA closing. That mall is on the verge of foreclosure.
I'm glad Bay Park Square, Green Bay, Wisconsin is not on that list.
Quote from: dmx10101 on May 04, 2016, 06:36:54 PM
Michigan
Fort Gratiot: Birchwood Mall
Howell: Tanger Outlet Center Howell
Those two are the only ones in the Detroit area that will close. The rest are safe (for now).
Waterford,CT in the Crystal Mall doesn't surprise me. That mall is losing tenants at a rapid rate. Overall, just not a high traffic mall like it used to be.
Sad that once popular "mall" stores like Gap, Abercrombie & Fitch, and Aeropostale are leaving a lot of malls. :-\
Quote from: Hudsons81 on May 07, 2016, 03:03:39 PM
Quote from: dmx10101 on May 04, 2016, 06:36:54 PM
Michigan
Muskegon: The Lakes Mall
Fort Gratiot: Birchwood Mall
Those two are the only ones in the Detroit area that will close. The rest are safe (for now).
Muskegon is nowhere near Detroit.
It's on Lake Michigan, northwest of Grand Rapids.
Quote from: TheFugitive on May 17, 2016, 08:32:47 AM
Quote from: Hudsons81 on May 07, 2016, 03:03:39 PM
Quote from: dmx10101 on May 04, 2016, 06:36:54 PM
Michigan
Muskegon: The Lakes Mall
Fort Gratiot: Birchwood Mall
Those two are the only ones in the Detroit area that will close. The rest are safe (for now).
Muskegon is nowhere near Detroit.
It's on Lake Michigan, northwest of Grand Rapids.
I meant the Howell location, but for some reason put in Muskegon instead.
End of the road for former teen apparel giant?
July 19, 2016 | By Marianne Wilson
It appears that Aeropostale Inc., which declared Chapter 11 bankruptcy in May, will be selling its assets rather than reorganizing.
The teen retailer said in court papers that “reorganization on a standalone basis is not feasible.†Instead, it will look for a “stalking horse†to make the lead bid at an auction next month, Bloomberg reported.
The proceeds of any sale will go to Aeropostale's creditors. The company listed $390 million in debt and about $354 million in assets in its Chapter 11 petition. It said it would try to hold an auction Aug. 22, if there is any indication of competitive interest.
Aeropostale also said it is still reviewing 11,000 pages of documents and depositions of key individuals that senior lender Sycamore Partners produced during a bankruptcy probe and is evaluating whether to pursue claims against the private equity firm and affiliates, the report said.
In its Chapter 11 filing, Aeropostale asked the court for permission to investigate its largest secured creditor, Sycamore Partners, saying Sycamore used a supplier it controls â€" MGF Sourcing â€" to help drive it into bankruptcy.
“While our merchandise repositioning have started to gain traction, the ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans,†stated Aeropostale CEO Julian Geiger at the time of the filing.
Aeropostale has recorded three consecutive years of losses as its struggles to deal with a teen audience whose spending tastes now favor fast-fashion giants such as H&M as well as online retailers.
A $243 million bid from a consortium of liquidators and other firms may rescue Aeropostale, though it will be a drastically smaller chain if the bid is accepted. Curiously, two leading mall operators (Simon and General Growth) are part of the consortium.
http://fortune.com/2016/09/02/aeropostale-bankruptcy-auction/
http://fortune.com/2016/05/04/aeropostale-stores/
list of stores closing, Meriden and Waterford are closing in CT. Connecticut stores that were to stay open included ones at Manchester’s Buckland Hills mall and in Enfield Square mall, as well as in Westfarms Mall in West Hartford
Quote from: TRU7536 on September 15, 2016, 08:03:38 PM
http://fortune.com/2016/05/04/aeropostale-stores/
list of stores closing, Meriden and Waterford are closing in CT. Connecticut stores that were to stay open included ones at Manchester’s Buckland Hills mall and in Enfield Square mall, as well as in Westfarms Mall in West Hartford
Those are the stores that were announced in May IIRC. There should be a second, much larger list if the consortium bid is approved.
Turns out that there will be more surviving stores - about 400 overall - due to the involvement of mall operators which include rent reductions
http://www.chainstoreage.com/article/unusual-deal-gives-aeropostale-new-lease-life--and-it-just-got-better