The Los Angeles-based company, which filed for bankruptcy protection Friday, has asked a bankruptcy court judge to approve the closure of 12 underperforming doors while keeping the lights on at 11, according to a declaration by the company’s majority owner Brian Lipman.
Confirmation of the plan is estimated to occur by August, a date which Lipman said in his declaration would allow the company to turn cash flow positive and continue operations.
This isn’t the company’s first go at bankruptcy. Bachrach sought Chapter 11 relief in 2006, a year after Sun Capital Partners’ acquisition of the business from the Bachrach family, which founded the company in 1877. The chain peaked with 79 doors.
Lipman, who had previously been a supplier to the company before leading a consortium to buy the business out of its first bankruptcy for $12 million, told WWD in 2007 he planned to grow the chain to somewhere between 100 and 150 doors. More recent market realities haven’t helped the business and Bachrach is now one in a string of retail bankruptcies to hit the industry. Recent Chapter 11 filings have included BCBG Max Azria, The Limited, Payless ShoeSource, American Apparel, Quiksilver and Wet Seal.
“The continuing fundamental shift in consumer behavior away from traditional mall shopping toward online-only stores and increased competition throughout the specialty retail fashion industry have created a difficult operating environment for many traditional mall-based fashion retailers such as Bachrach,” Lipman said in his declaration.
The company opened 17 stores in 2012 as a result of a deal struck with Simon Property that included a mix of class C and class A leases, which “would ultimately prove detrimental to the company,” Lipman said. Sales at physical stores began to decline around mid-2016 with sales off about 10 percent at brick-and-mortar by the end of last year.
The company attempted to stem the decline with the closure of four stores late last year and into this year, but the effort proved unsuccessful.
Bachrach revenue has averaged $18.4 million in the past three years with earnings before interest, taxes, depreciation and amortization falling from $710,000 in 2015 to a loss of a $100,000 last year. The online business saw sales of $1 million in 2014 and again in 2015 before rising to $1.2 million last year.
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