Fashion brands impacted by COVID-19 pandemic, announced closures or filed for bankruptcies
The end... or is it?
The pandemic's effect on the fashion industry is apparent. With stores closed during the lockdown period that involved 48 countries worldwide, sales are down across the board, and retailers that are still following the traditional business models are undoubtedly suffering the worst consequences. Let's not forget the smaller labels that may not have the financial backing like some others, and brands that were already in a bad shape pre-COVID-19.
According to data from the American Bankruptcy Institute, the number of bankruptcy filings has seen a 26% increase in April from last year. But while Chapter 11 doesn't necessarily mean it's the end for those companies, some brands on this list are not as lucky.
Below, a list of fashion brands that have announced closures or filed for bankruptcies during the pandemic:
April 13: True Religion
For the second time in three years, denim retailer True Religion has filed for bankruptcy on April 13 due to the prolonged closure of its physical retail stores across the US. According to court documents, "While the debtors would have preferred to wait out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so." The brand listed USD $100 million to $500 million in assets and liabilities in the court filing.
May 4: J. Crew
J. Crew was the first big US apparel retailer to file for bankruptcy protection after struggling with declining sales and a huge debt of USD $1.65 billion. According to Forbes, under a "debtor-in-possession agreement", its main creditors will be taking control of the group by converting the debt into equity, and they will also be providing USD $400 million for the stores to stay in operation.
May 6: John Varvatos
Menswear brand John Varvatos that's known for its tailoring-meets-rock 'n' roll aesthetic has filed for Chapter 11 bankruptcy protection. Citing falling sales, the label has listed over USD $140 million of debt in court filings. This is not the end for Varvatos, however, as the designer has plans to sell the company to an affiliate of its investor, Lion Capital LLP.
May 7: Neiman Marcus
Although the luxury department store Neiman Marcus managed to avoid bankruptcy after restructuring its debt last year, the pandemic has forced them to file the paperwork in May after they skipped millions of dollars in debt payments in April. One and a half month later, on June 18, the group says that it's on track to emerge from Chapter 11 in Autumn 2020, thanks to the strong performance after reopening of 90% of its stores, and the access to USD $250 million in creditor financing.
April 21: Cath Kidston
British homeware and fashion brand Cath Kidston will be shutting down all 60 of its UK stores for good, putting over 900 staff out of work. Moving forward, it'll restructure itself as a wholesaler and online brand. The brand mentioned that its Asia stores — including Singapore — will operate as usual. However, just two days later, its Japan counterpart also filed for bankruptcy with over 6.5 billion yen in debt due to COVID-19 pandemic.
Its CEO Melinda Paraie said: "While we are pleased that the future of Cath Kidston has been secured, this is obviously an extremely difficult day as we say goodbye to many colleagues. Despite our very best efforts, against the backdrop of Covid-19, we were unable to secure a solvent sale of the business which would have allowed us to avoid administration and carry on trading in our current form."
April 28: Esprit
Esprit has revealed that it'll be closing down all of its Asia stores outside China-namely Malaysia, Singapore, Taiwan, Hong Kong, and Macau-by end of June 2020. The 56 stores in the five countries only account to less than 4% of the brand's sales, and the slump in sales over the last nine months was further hit by the pandemic.
April 30: Oasis and Warehouse
After failing to secure new buyers for the business, high-street fashion brands Oasis and Warehouse will permanently close all their stores, which will result in the loss of over 1,800 jobs. Deloitte has been made the administrator of the insolvency process, and in a statement released by the firm, its joint administrator Rob Harding said: "COVID-19 has presented extraordinary challenges, which have devastated the retail industry. It is with great sadness that we have to announce a sale of the business has not been possible and that we are announcing so many redundancies today."
However, on June 17, online fashion retailer Boohoo announced that it has agreed to buy the online businesses of both brands for 5.25 million pounds, and they'll be integrated into its platform in the coming months. The group did the same by buying Coast and Karen Millen's online businesses last year.
June 15: Sies Marjan
After over four years in business, New York-based luxury label Sies Marjan is closing its doors for good, due to the significant financial impact from the COVID-19 pandemic. According to a statement by the brand via Business of Fashion, its founder Sander Lak says, "What we have worked on has been a dream come true," the brand's founder and creative director Sander Lak said in a statement. "Thank you to everyone who has given their time and talent to Sies Marjan over the years." The brand's Instagram page, which has almost 230k followers has been deleted following the founder Sander Lak's announcement.
June 15: Matter
Singaporean ethical fashion brand Matter has announced its decision to close after six years in business. The brand was known to collaborate with artisans across the region using socially-conscious and heritage-based textiles. "After several months of uncertainty, we've reached a decision that this chapter of our story, is ending. It was not an easy one to make, and it's not an easy one to share with you. We are deeply sad, and we feel the loss greatly. Though we've explored many possible pathways, given the future ahead, pressing pause for now is the responsible action to take," reads the statement on its website. Fans of the brand, however, will be delighted to hear that this may not be the end for Matter. It ended its statement with "This is not goodbye forever. This is goodbye, for now."
April 29: H&M
H&M is planning to permanently close eight stores in Italy. Two of its biggest stores in Milan and one in Bari did not reopen even though Italy has lifted its lockdown on May 18, while five more outlets located in the cities of Bassano del Grappa, Gorizia, Grosseto, Udine, and Vicenza will shutter in the next few months. According to an email statement, a spokeswoman for H&M said: "The decision to close is linked to the economic sustainability of each specific store," and that the company plans to "optimise its store portfolio, add new services online and keep offering clients the best shopping experience, through different channels".
May 21: Victoria's Secret
Victoria's Secret is shutting 250 stores across the US and Canada, but its owner L Brands warned that more outlets might be closed in the coming two years. The brand currently has over 1,000 boutiques in those two countries.
June 10: Guess
American retailer Guess will be closing 100 stores (around 9% of its total amount) over the course of the next 18 months. The closures will primarily be affecting stores in North America and China. Although its CEO Carols Alberini mentioned that this decision came about as many of the leases are ending, the pandemic undoubtedly played a huge part in that. The brand's sales reportedly fell by over 50% compared to last year's.
June 11: Zara
In a move to focus on digital growth, Zara's owner Inditex will be closing up to 1,200 stores (aka 16% of its network) worldwide over the next three years and invest USD $3 billion in its online operations. The group revealed that the fast-fashion retailer's sales are down by a whopping 44% compared to last year. The specific locations have yet to be revealed, but it will likely involve the group's other brands including Pull & Bear, Bershka, and Massimo Dutti.
June 15: Diane von Furstenberg
Diane von Furstenberg's namesake brand is also suffering a hard hit amid the pandemic. The brand is closing 18 of its 19 stores-including international boutiques in France and England-and has furloughed 75% of its staff. According to Business of Fashion, the label will adopt a "digital-only, China-focused" business model.