The cost to terminate the leases is estimated at $65 million and Bebe said it’s also reached an agreement to sell a distribution center in Benicia, Calif., for about $22 million, which is expected to close sometime in the next three months.
Bebe’s Los Angeles design center is also up for sale, and the company is “actively” looking for a buyer.
The brand has entered into a $35 million loan agreement with GACP Finance Co. LLC in order to make payments to landlords until sales of the buildings close.
Wall Street applauded the move and sent shares of Bebe up 13 percent in at the start of trading to $5.71, a high for the month.
While Bebe’s restructuring has been in the works for months and its 170 stores were expected to close by the end of May, in order to make the brand on online-only business, its web site URL and wholesale agreements have been transferred to Bluestar Alliance.
The online business will also be managed and operated by a third party.
“Going forward, the company anticipates having no retail operations and its sole operations will be the collection of royalty income from the [joint venture with Bluestar],” Bebe said.
A Bebe representative could not be reached for additional comment.
Bebe is far from the only retailer forced to restructure or consolidate their operations in the face of mall traffic declines and the accelerating rise of online shopping, but it is one of few struggling retailers to avoid bankruptcy.
Sigerson Morrison is one brand that recently left bricks-and-mortar retail behind, ostensibly to “focus” online, but Rue 21 Inc., Gordmans Stores, BCBG Max Azria, Payless ShoeSource Inc., and The Limited all have filed for bankruptcy over the last several months.
Other larger businesses like Macy’s Inc. and J.C. Penney Co. Inc. have opted to shrink their store base with scores of locations set to close and hundreds of jobs being cut. In May alone, department stores account for 3,700 lost U.S. jobs.
For More, See: