BELK DEPARTMENT STORE CHAIN FILES FOR BANKRUPTCY

The largest US retailers continue to experience financial difficulties due to the pandemic. Consumers are reluctant to visit shopping malls, preferring to shop online, and the long-term lockdown has led to changes in consumer behavior, increasingly refusing from new clothes and shoes. These phenomena lead to the fact that department stores prefer to apply to the courts for bankruptcy protection. Belk, the largest retail chain in the southeastern United States, has recently done it as well.

Analysts note that Belk's businesses have been able to withstand the financial pressures of the pandemic for a long time compared to other companies. The largest retailers of the US, including Neiman Marcus, Stage Stores and the country's oldest department store chain Lord& Taylor, have declared bankruptcy before. The well-known company J.C. Penney miraculously managed to avoid the same outcome, as the owners of large shopping centers Simon Property Group and Brookfield Property Partners became its investors.

In a press release, Belk’s representatives noted the company reached an agreement with its majority owner, Sycamore Partners investment firm, which will support Belk with a $ 225 million financial commitment.

This will reduce the debt burden by $ 450 million.

The retailer's 300 stores in 16 southeastern states and online will continue to operate as usual. The company hastened to reassure suppliers and customers, convincing them that the bankruptcy process would not affect the interaction with them. At the same time, the company hopes to go through the restructuring procedure as quickly as possible and by the end of February successfully emerge from bankruptcy by concluding an agreement with creditors. In this case, the investor, represented by Sycamore Partners, will be able to retain a controlling stake.

Belk store chain has existed in the United States since 1888. According to Lisa Harper, CEO of the company, the company's top priority has been and remains the safety of partners and customers, and debt reduction will allow to reach greater financial flexibility.

Sycamore Partners, a private equity firm based in New York, is the retailer's savior.

It was established in 2011 and it is currently specializes in investments related to distribution and retail. It is known that the total capital of the firm's investors, including leading trust funds, banks, pension and government funds, is about $ 10 billion. Earlier, the firm acquired several well-known brands of women's clothing.