(Bloomberg) — Body Central Corp., a mall-based clothing retailer, is preparing a bankruptcy filing that could come within the next week, people familiar with the matter said.
The company is working with the accounting and consulting firm Richter, according to the people, who asked not to be identified because the discussions are private. Body Central, based in Jacksonville, Florida, said earlier today that it received a notice of default on $18 million in debt and is assessing strategic alternatives.
The company, which lost $70.2 million in the 12 months ended in September, is the latest seller of young women’s clothing to fight for survival. Shrinking foot traffic and encroachment by online sellers have put the squeeze on retailers that count on malls for their livelihood. Body Central, a four- decade-old chain that operates 265 stores in 28 states, had only $4.5 million in cash and equivalents as of Nov. 3.
Body Central fell 68 percent to 33 cents as of 3:13 p.m. in New York after its earlier announcement. The stock lost 97 percent of its value last year.
Timothy Benson, the retailer’s senior vice president of finance, didn’t respond to a request for comment. Richter, based in Montreal, also didn’t immediately return a request.
Body Central also is in discussions about lining up additional financing, which could help with a reorganization after bankruptcy, another person said. Body Central said earlier today that it was suffering “significant liquidity challenges.”
Two other clothing chains — Deb Shops and Delia’s — filed for bankruptcy last month, hurt by competition from e-commerce sites and fast-fashion retailers. Wet Seal Inc., meanwhile, said today it will close about two-thirds of its locations as it strives to save cash after receiving a default notice on $27 million in notes.
Body Central was founded by Jerrold and Ronnie Rosenbaum, who opened their first store in Jacksonville in the early 1970s. It operates under the Body Central and Body Shop brands, mostly within malls.