Jewelry and home furnishings retailer Fortunoff has stopped paying its bills in recent weeks and could be considering Chapter 11 bankruptcy court protection as well as other options to reorganize its business, financial sources said. The company said it is considering strategic alternatives.
One credit source stressed that a bankruptcy filing is only one option. A bankruptcy would give the specialty retailer some breathing room from its creditors.
Another option would be for the founding Fortunoff family, which retains a minority stake and still owns some valuable real estate, to sell some of those assets, sources said. Other sources speculated the company could be bought by another retailer.
Fortunoff said in a statement: "Fortunoff has been and is continuing to work with its financial advisors to consider the complete range of strategic alternatives for the company. Our stores are fully staffed and open for business as usual, and we remain committed to serving our customers."
Meanwhile, other industry sources said there is speculation an Indian investor may look to acquire the retailer — but only if it files for bankruptcy protection.
Another source cited the retail environment and a slowdown in sales of the retailer's home furnishings categories, which include giftware and tabletop, as two of the reasons for the company's fiscal woes.
The credit source also said that, after a majority stake in the retailer was sold to a private equity group in 2005, many factoring firms had stopped assessing the creditworthiness of the company since financial information was no longer being sent to them. Fortunoff, he said, has been getting merchandise from vendors, with suppliers taking on the risk of not getting paid.
One contact close to fine jewelry suppliers said they and others have shipped to Fortunoff since the sale in 2005 at their own risks because the "retailer had a reputation for always paying their bills."
The retailer supposedly stopped paying its bills at the beginning of the year, sources said, and a recent deal to secure a financing package fell through earlier this month.
In August, Fortunoff sold the lease of its New York flagship at 681 Fifth Avenue near 54th Street. The store relocated to 3 West 57th Street.The Fortunoff family sold a majority stake to Trimaran Capital Partners and K Group, which was in part to help finance the $500 million chain's expansion in the New York and New Jersey markets and eventually into other areas across the U.S.
Fortunoff was founded in 1922 by Max and Clara Fortunoff. Their son, Alan, served as president and chief executive officer until his death in July 2000. Since then, his wife, Helene, has stepped up to take the reins; Louis Fortunoff is her son.
Trimaran, headquartered here, has made previous investments in Urban Brands, a plus-size apparel company under the Ashley Stewart name; Reddy Ice, a leading packaged-ice supplier, and Educational Services of America, a special education school operator.
K Group, also based here, makes private equity investments in lifestyle and luxury consumer products and retail businesses, including Harry Winston and Rubbermaid.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews