By  on January 10, 2018

Mall retailer A’Gaci is the latest struggling brand to file for bankruptcy.The Texas-based company, a women's fast-fashion chain selling trendy apparel, accessories and makeup in stores and online, filed for protection from creditors on Tuesday, citing debt of $62 million and assets of $82 million.It’s largest creditors are Bank of America, which has a $4.3 million first lien against the company set to mature at the end of this month, and American Express, which has a $1.7 million claim. Most of the remaining largest claims range between $400,000 and $100,000 and appear to be held by wholesale accounts.A’Gaci is a private company founded in San Antonio in 2001 by John and David Won and operates 78 stores, mainly based in malls in Texas, California, Illinois and Florida, according to court filings. Through the bankruptcy process, A’Gaci wants to close and liquidate the assets of at least 49 stores, if not more, and focus more of its business online.Mark Butterbach, the company’s chief financial officer for the last year, wrote in a court filing that A’Gaci has been “negatively affected by unsuccessful brick-and-mortar expansion efforts” as well as a consumer shift to shopping online, internal difficulties implementing a new retail system and last year’s extreme hurricane season. Butterbach said A’Gaci’s most profitable locations in Texas and Florida were affected by the hurricanes and its two stores in Puerto Rico are still closed.The company’s 2017 sales, though November, tallied $136.2 million while its earnings before income, taxes, depreciation and amortization totaled only $2.5 million. In 2016, EBITDA came in at $4.7 million. Only 9 percent of its total sales last year came from online purchases.But the cfo focused on A’Gaci’s “aggressive growth” starting in 2015, which saw it open 21 new stores over two years, as cause for its current troubles. “The debtor’s rapid expansion into new markets spread the organization too thin to effectively respond to the rapidly changing trends in the retail market,” Butterbach wrote. “The debtor’s operational struggles were compounded by customers’ increasing preference for web-based purchases of items historically purchased at shopping malls. Foot traffic in malls has declined significantly during the last several years, and has led to corresponding declines in revenues at mall-based businesses like the debtor’s.”Indeed, a number of mall-based retailers have filed bankruptcy over the last year or so, including Aerosoles, Charming Charlie, The Limited and Rue 21, among others.For More, See:Calypso Set to Liquidate, Close All StoresRue 21 Gets New CEO, Board of Directors Post-BankruptcySears Canada Liquidating After Failing to Find Investor

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