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NEW YORK — Scoop NYC, the contemporary retailer created 13 years ago as “the ultimate closet,” is under increasing financial pressure.
This story first appeared in the July 10, 2009 issue of WWD. Subscribe Today.
Several factoring companies have stopped giving Scoop credit and approving orders. The chain, which was purchased about two years ago by billionaire Ron Burkle’s Yucaipa Cos. LLC, is said to be undercapitalized and has been slow in paying its vendors, according to financial sources.
“Some designers will ship them regardless, but we have not approved them for quite some time — since September 2008,” said Gary Wassner, president of Hilldun Corp.
“They’re unresponsive in their accounts payable department,” Wassner added. “They’re not cooperative. They’re not providing any financial information to make any kind of analysis of how they’re doing. In today’s market, it’s important to be transparent.” He said other factors in the market are not approving the retailer either, citing Rosenthal & Rosenthal, CIT Group, GMAC and Wells Fargo.
Wassner said some of his clients are shipping Scoop, which has 11 stores, but giving Hilldun the invoices to collect for them. “They’re running past due and not responsive at all,” he said. “Clients are shipping at their own risk.”
Four of Wassner’s clients are owed money and have invoices from February, March, April and May. “None are approved, and they asked us to help collect,” he said.
“We’re very concerned about the status of the account,” said Michael Stanley, managing director of Rosenthal & Rosenthal.
A CIT Group spokesman said, “Our policy is not to comment on our credit decisions regarding specific retailers.” Wells Fargo declined comment. A spokeswoman for GMAC Financial said, “We don’t comment on our clients’ business.”
Robert J. Wichser, who oversees Yucaipa’s fashion portfolio, which includes Scoop, told WWD, “The financial condition of Scoop is sound.” He said the retailer has been paying vendors and has seen an improvement in business. A search is underway for a new chief executive officer to replace Melanie Cox, who held the job for a year and left in February.
Responding to Wichser’s remarks, Hilldun’s Wassner said, “If the numbers are good, why don’t they show the credit community? Clients want to ship them and have decided not to ship them. We are getting paid slowly and clients are shipping very little. I’d love to have a dialogue with them. We don’t even get financials.”
Wichser conceded, “We had for a period of time some issues. We’ve put money into the company and we’re paying our vendors and are getting goods shipped. We’ve paid down our vendors and have a new flow of product coming in. We have been transparent in our communication with our key vendors.” He said Yucaipa has no plans to sell the company.
One Scoop vendor, who spoke on condition of anonymity, told WWD the situation looked dire in February and March, but the vendor has been paid recently.
Yucaipa, a private equity firm founded in 1986, began with a series of grocery chain mergers and acquisitions involving firms such as Fred Meyer and Ralph’s. It owns a stake in about 35 companies, including Sean John, jewelers Garrard and Stephen Webster, and the designer label Zac Posen.
Scoop, founded by Stefani Greenfield and Uzi Ben-Abraham, was a pioneer in its mix of hip and fashion-forward contemporary and designer clothes, which ran from Marc Jacobs Collection and Diane von Furstenberg to Theory and Seven Jeans. The concept was to organize the latest fashion must-haves — not by designer label, but by color, classification and trend. Scoop, whose customers often included mothers shopping with their teenage daughters, continually tapped into the season’s must-have pieces.
But Greenfied left last year to set up a new consulting business, and some sources believe with her departure the store lost its fashion leadership, well-edited assortments and ability to spot and jump on the latest trends.
There is no shortage of stores courting the same customer, such as Barneys Co-op, Intermix and Calypso, as well as major stores such as Saks Fifth Avenue and Bergdorf Goodman. The collapse of the economy last fall pushed retailers such as Saks and Bergdorf Goodman to drastically reduce prices weeks before the holiday, making it difficult for Scoop and others to compete. Several small contemporary and designer boutiques have been forced to close, including Tracey Ross, Linda Dresner and Georgina.
Scoop began as a SoHo boutique ensconced amid footwear and denim shops on Broadway. In the go-go years, the retailer opened 11 stores from East Hampton, N.Y., to Chicago and as far south as Miami Beach. In addition to those units, the firm has locations in SoHo, the Upper East Side and the Meatpacking District in Manhattan; Greenvale, N.Y.; Greenwich, Conn.; The Forum Shops at Caesars in Las Vegas; Atlantic City, N.J., and Dallas.
Wichser said Scoop is constantly reviewing its real estate, and plans to stay in all of its locations.
Faith Consolo, chairman of Prudential Douglas Elliman retail leasing department, said she had some inquiries from landlords who own Scoop’s property asking about the value of the spaces and how long it would take to get replacement tenants.
“If and when any of their spaces came on the market, there would be a line out the door,” Consolo said.
“In this environment, it’s very challenging,” Consolo said. “Scoop, like Intermix, is what Charivari used to be. They’re a New York story. Like Intermix, they expanded and overexpanded and never anticipated the downturn of the market.” She also said it’s hard to remain in control when their stores are so spread out, and the competition has intensified.
“The sales [at department stores] have killed the small guys,” she said. “Scoop has some very expensive stuff. They have a very attractive merchandise mix, but if you can’t offer it on sale or at an attractive level, the consumer is not there.”
Stacey Pecor, owner of Olive & Bette’s, the contemporary retailer in New York, agreed it’s difficult for the small retailer to compete. “The department stores have become discounters, and it is impossible to maintain margins and compete. I feel like it is either going to be them, the big guys, or us little guys. We are struggling to coexist.”
On Wednesday, a group of 17 former Scoop NYC workers filed a federal lawsuit against the retailer alleging labor violations such as unpaid overtime. The plaintiffs are seeking $500,000 in back wages, and the violations allegedly took place between 2000 and 2008.