Lucky Brand Jeans Files for Bankruptcy -- WSJ
July 06 2020 - 3:02AM
Dow Jones News
By Becky Yerak
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 6, 2020).
Clothing retailer Lucky Brand Dungarees LLC has filed for
bankruptcy with initial plans to close at least 13 stores and with
a possible deal to sell its private equity-backed business to the
operator of Aéropostale and Nautica brands.
Debts of the Los Angeles-based business, which is owned by
Leonard Green & Partners LP, include $182 million owed to
lenders and $79 million to merchandise vendors, according to a
filing Friday in U.S. Bankruptcy Court in Wilmington, Del.
SPARC Group LLC is leading a proposed deal to buy the business,
according to a declaration filed with the court by Mark A. Renzi,
Lucky Brand's restructuring chief. SPARC is an apparel company
operating under the Aéropostale and Nautica brands owned by
Authentic Brands Group LLC and Simon Property Group, one of Lucky's
key landlords, a court filing said.
The offer is subject to better and higher bids and court
approval. The bid for Lucky includes $140.1 million in cash and a
credit bid of $51.5 million by lenders, a court filing said. It
also has a backup bid if that one falls through, a filing said.
This isn't the first time Authentic Brands and Simon have teamed
up to take over a troubled retailer. The two firms, along with
Brookfield Property Partners, teamed up to buy bankrupt retail
chain Forever 21 earlier this year. Authentic Brands and Simon were
also part of the group that bought Aéropostale out of bankruptcy
about four years ago.
Lucky Brand blamed its financial woes on the shift away from
bricks-and-mortar stores to online channels, a highly competitive
retail environment, and a move in consumer spending away from
apparel to technology. The coronavirus pandemic also has caused a
month-over-month decline in revenue of about 50%, it said.
Founded in 1990, Lucky Brand currently has more than 200 North
American stores. It didn't rule out closing additional stores
beyond the initial 13 it has identified.
The company estimates that its lease expenses will be $52
million in fiscal 2020. Its biggest unsecured creditors include
Simon, which is owed more than $4.6 million, a court filing
says.
Lucky shareholders also include Carlos Alberini, its former
chief executive officer and the current CEO of Guess? Inc. Mr.
Alberini left Lucky Brand last year to return to Guess.
Lucky's existing lenders are providing $15.6 million in
financing to help the company get through bankruptcy.
Lucky's bankruptcy advisers include law firm Latham &
Watkins LLP, consulting firm Berkeley Research Group LLC and
investment banker Houlihan Lokey Capital Inc.
Write to Becky Yerak at becky.yerak@wsj.com
(END) Dow Jones Newswires
July 06, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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