Gordmans Stores Inc. is liquidating its operations.
The Midwestern valued-priced department store filed a voluntary Chapter 11 petition for bankruptcy court protection on Monday, giving it some breathing room as it winds down operations.
The retailer, which filed in federal bankruptcy court in Nebraska, is based in Omaha and was founded by in 1915 by Sam Richman. He later joined forces with his son-in-law Dan Gordman and the two formed Richman Gordman. Eventually all the stores were renamed Gordmans.
Gordmans entered into an agreement with Tiger Capital Group and Great American Group for the sale of its remaining inventory and other assets connected with its stores and distribution centers. The hiring of the two liquidators is subject to bankruptcy court approval.
Andy Hall, president and chief executive officer of Gordmans, said, “Until further notice, all Gordmans stores are operating as usual without interruption.”
The retailer currently has 106 stores in 62 markets across 22 states. Gordmans already consolidated its workforce at the end of January.
In 2008, the company was sold to private equity firm Sun Capital Partners. Sun took the company public in 2010 and a secondary public offering was completed in 2012. Sun still owns 49.7 percent of the retailer.
According to the bankruptcy petition, the company has between 10,000 and 25,000 creditors. It also estimated assets at $274 million and liabilities at $131 million. Five affiliates of Gordmans filed for Chapter 11 bankruptcy court protection as well.
James B. Brown, chief financial officer, said in a court filing that the retailer posted revenues of $610.5 million in 2016. Of that total, 55.9 percent came from apparel, while 28.6 percent came from home goods and 15.5 percent from other merchandise, including fragrances and accessories.
“Like many other apparel and retail companies, the debtors have fallen victim in recent months to adverse macroeconomic trends, especially a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics and expensive leases,” Brown said.
While the firm projected a comparable-store sales decline of 9.5 percent in February, the cfo also said comps actually dropped 20 percent.
Gordmans began exploring its strategic options in July. In September, after failed negotiations with an interested party, the company contacted 14 strategic parties and 70 financial parties regarding a sale of the firm. A total of 34 parties entered into confidentiality agreements, but none of the negotiations resulted in a transaction. Brown said a majority of the retailer’s vendors stopped shipping new inventory this month.
The company has 5,094 employees, most of whom work part-time at the retailer.
The majority of Gordmans’ top 20 unsecured creditors are landlords and the few who are on the list as holding trade claims appear to be private label manufacturers.
Gordmans is just the latest in a growing line of retailers succumbing to bankruptcy. Last week, Gander Mountain filed a petition as well. And earlier this year saw the Chapter 11 filing by women’s specialty chain The Limited, American Apparel and BCBG Max Azria. The Limited shuttered operations before it filed and, like Gordmans, was a portfolio company owned by Sun Capital.