CHICAGO — Jake, which became one of the Midwest’s most influential luxury boutiques as it championed emerging designers, has filed for bankruptcy and will close.
The quick ascent of the six-year-old men’s and women’s specialty store ended when the economic downturn took hold and it was unable to pay bills. A group of 28 designers, including Philip Lim, Lutz & Patmos, Chris Benz, Behnaz Sarafpour and Band of Outsiders, filed an involuntary bankruptcy petition last September seeking $516,000 from the retailer.
Attorney Dan Zazove, who represented the designers in the legal action, said the bankruptcy filing by the Jake Retail Group LLC will effectively end the effort to get reimbursement, adding some designers may feel “vindicated” by the closing.
“We deeply regret that there was anyone who did not get paid,” creative director Lance Lawson, who cofounded Jake with Jim Wetzel, said on Wednesday. “We’re all taking risks together.
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Jake’s remaining store on North Rush Street in Chicago’s Gold Coast neighborhood is expected to shut early next month, or possibly sooner.
“The last 18 months have been beyond horrendous,” Lawson said. “For us, we’ve been barely hanging on.”
Jake is the third high-profile retailer to shut here this year because of fallout from the recession. Designer Maria Pinto abandoned her retail and wholesale operations this month and Ultimo, a beacon for the fashionable set for some 40 years, went out of business in January.
Jake’s original business plan to bring lesser-known designers to Chicago proved faulty during the economic downturn as the spending habits of consumers underwent a fundamental change.
“If customers want to pay designer prices they want someone that they know,” Lawson said. “The business model we started with is hopelessly broken.”
Lawson and Wetzel formed a company in 2004 called Price Allen Inc., which operated the three Jake stores and an online business. The co-founders cultivated young designers and were honored by Fashion Group International of Chicago. They became a presence at runway shows in New York.
But Price Allen disbanded after lender MB Financial called in a $1.6 million loan and credit line when Jake failed to meet profit quotas in 2008. Two of the stores closed. A group of silent investors then bought what had been Price Allen’s assets and hired the founding partners to run the new company, Jake Retail Group, but did not assume any of the debt.
As the Jake Retail Group, Lawson said he had hoped to recreate the store’s previous success, lowering prices and bringing in new vendors.
“It’s too hard,” he said, adding that foot traffic during the winter was at an all-time low. “This winter was the worst of any of it.”
Lawson and Wetzel, however, do not plan to abandon retail. Working with new investors, the pair is set to debut a pop-up shop called Space 519 in May at the 900 Shops, a Michigan Avenue shopping center housing Bloomingdale’s and Michael Kors, among others. The temporary shop would sell books, CDs, apothecary items, men’s and women’s accessories, but no apparel. The partners also plan a home-based concept store on the city’s North Side in the fall, Lawson said.