RTW Retailwinds Inc. is considering bankruptcy.
The retail parent company of brands including New York & Co., Fashion to Figure, Happy x Nature, as well as celebrity collaborations with Eva Mendes, Gabrielle Union and Kate Hudson, said in a regulatory filing Wednesday that it is considering filing for Chapter 11 as a result of the COVID-19 crisis. As of the third quarter of 2019, the company had 414 stores, according to the company’s previous filings with the U.S. Securities and Exchange Commission. Its net sales for the nine months ended Nov. 2 were $603 million.
The pandemic has disrupted its supply chain, caused it to close stores, and furlough all store associates, the company said. The company also said that it is likely to default on a number of its obligations, including a loan agreement with Wells Fargo on which it said that it drew down $40 million in late March.
The company also hasn’t paid rent on its stores for April and May, nor paid its vendors in recent weeks. The COVID-19 crisis has exacerbated some of its preexisting issues, it said. As of February, the company’s “non-current lease liabilities” were $189.2 million and its retained deficit was $164.6 million, it said.
“As of the date of this filing, the company has received default notices from many landlords and vendors for non-payment,” the company wrote in a filing Wednesday with the U.S. Securities and Exchange Commission. “The company may be in default of all of its store lease agreements as of the date of this filing, but has not yet received default notification from all landlords.”
“As the impact of COVID-19 evolved, the company took decisive action to temporarily close all of the company’s brick-and-mortar stores to ensure the health and safety of its employees, customers, and communities,” it said.
The company had closed all its stores since March 19, but is still looking to reopen in June, reopening the stores in batches throughout the month. The company also said that it “permanently reduced” the headcount at its corporate headquarters by half.
“As of the date of this filing, in accordance with the federal and state guidelines and the adoption of new health and safety recommendations resulting from the COVID-19 pandemic, the company expects to begin reopening its brick-and-mortar stores during the first week of June 2020,” it said.
“In addition to furloughing a substantial number of the company’s personnel and terminating certain corporate personnel, the company has taken steps to reduce operating costs and improve efficiency, including targeted reductions in capital expenditures, and engaging in conversations with landlords and vendors to defer payments until the company’s brick-and-mortar stores reopen,” it said.
Retailers that have already filed for bankruptcy protection during the pandemic include J. Crew, Neiman Marcus Group and J.C. Penney, which are all planning to use the process to restructure and emerge from bankruptcy.