Womenswear retailer Deb Stores Holding LLC joined clothing chains including Loehmann’s Inc. and Coldwater Creek Inc. in filing for bankruptcy, saying a shortage of capital left it with “old, tired stores.” The Philadelphia-based operator of Deb Shops sought Chapter 11 protection today in Wilmington, Delaware, with plans to close some stores and sell inventory if it can’t find a buyer for the business. The company specializes in juniors “fast fashion” and offers moderately priced clothing, accessories and shoes for young women. As of Sept. 30, it had 295 locations, according to court filings.
“Deb’s recent performance has been strained due to a combination of factors, including historic lack of capital invested in business resulting in old, tired stores with unfavorable mall traffic trends and general weakness in the competitive juniors space,” Chief Executive Officer Dawn Robertson said in court papers.
Fast-fashion retailers specialize in inexpensive, trendy clothing in the latest designs.
The company said that it has been working with a joint venture of Gordon Brothers Retail Partners and Hilco Merchant Resources on an agreement to liquidate merchandise and that it will seek approval to designate the venture as the “stalking horse,” or lead bidder, in a court-supervised auction.
A number of retailers of women’s clothing have folded in the past year as shopping-mall traffic stagnates and consumers look to the Internet for bargains. Loehmann’s began its bankruptcy last December, with 39 stores in 11 states. Coldwater Creek sought creditor protection in April with plans to liquidate the business. Dots and Ashley Stewart also filed as sales declined and losses mounted after the recession.
Deb’s consolidated financial statements listed assets of about $90.5 million and debt of about $120.1 million as of Dec. 31. A predecessor, DSI Holdings Inc., had sought bankruptcy protection three years ago to sell assets.
The retailer plans to borrow as much as $25 million from PNC Bank NA to help fund operations as it restructures, according to court papers. The company said its business won’t be interrupted and obligations to customers and workers will be fulfilled.
Equity holders of Deb Stores include Cerberus Series Four Holdings LLC, with a 37 percent stake; Abelco LLC, with a 20 percent stake; and Styx Partners LP, with a 12 percent stake, according to court papers.
The company traces its roots to foundation-garment seller Joy Hosiery, established in 1932 in Philadelphia by Philip Rounick and Emma Weiner, according to court papers. The firm expanded with the advent of post-World War II suburban shopping malls. The chain was renamed Deb Shops in the 1970s.
The case is In re Deb Stores Holding LLC, 14-12676, U.S. Bankruptcy Court, District of Delaware (Wilmington).