Buckle, Foot Locker, and others file for Chapter 11 protection to shift debt from ones to invest in “leadership and innovation”
Ann Taylor and Lane Bryant owner ANN Inc. filed for Chapter 11 bankruptcy Wednesday. The New York-based company is the first major retailer to enter bankruptcy this year, marking another hit to the retail industry as a whole that already reported three-straight quarters of tumbling revenue and fourth-straight quarters of declining sales for a shopping experience in freefall.
The company cited in its Tuesday filing a liquidity crisis caused by a lack of funding to “address its balance sheet, assets and liabilities.” In the announcement, the company said it will look to restructure $1.95 billion of debt, leaving it with $554 million in cash on hand.
“Like every other retail sector, our business has been challenged by industry headwinds and changing consumer shopping patterns,” CEO Jill Soltau said in a statement. “As a result, we needed to take the decisive action to restructure our balance sheet to strengthen our financial foundation going forward. With a full slate of actions that affect the entire business, we have created a plan to focus our resources on growth areas of our business and address our balance sheet.”
The problem at ANN is that a large portion of its business is apparel. As shoppers increasingly prefer fast-fashion retailers like H&M and Uniqlo instead of pricey fashion labels like Ann Taylor, sales have suffered. The company tried to change things by shifting resources toward Loft, which sell much lower-priced goods and is generally more of a direct competitor to fashion labels. But that didn’t stem the tide of declining sales.