Sources Tuesday afternoon said the company is getting closer to a bankruptcy filing. The women’s retailer had hired Guggenheim Securities to find a buyer, but by late last month the market started buzzing that liquidation was a real possibility for the business.
A spokesman for The Limited declined comment.
Other sources familiar with the process indicated that filing for bankruptcy was on the table, but declined to be specific on timing.
Earlier this month, The Limited warned of mass layoffs in its New Albany, Ohio headquarters. It made a requisite filing with Ohio’s Department of Job and Family Services, warning regulators of job cuts, and noting the possibility that all 249 employees at the central office could lose their jobs.
Larry Fultz, executive vice president and chief operating officer for the chain, said in a letter to employees that was attached to the state filing, “Product misses and massive shifts in retail shopping trends have been especially difficult for the company’s business, and the company is dealing with significant debt obligations.”
He added that the level of debt requires that the “company be sold or we will have to wind down our operations due to an anticipated lack of operating capital.”
Struggling chains often wait until after the holiday selling season to build cash to fund a tour in bankruptcy court. Firms that need to file earlier typically are in dire straits and often don’t get the chance to restructure operations.
As part of the sales process, brand management firms were contacted as possible buyers.
The Limited has faced issues similar to those of other mall-based retailers. And the holiday season might not have been much help in garnering sales or traffic, despite the multitude of promotions. According to weekly data measured by Prodco, North American retail traffic fell 16.4 percent for the week ended Saturday. Baird’s retail analyst Mark R. Altschwager said the “16.4 percent decline [in the Prodco survey] is the worse we’ve seen all year.”