LUCKY BRAND AND G-STAR RAW BRANDS WENT BANKRUPT

Lucky Brand and G-Star Raw, two fashionable American brands, made a decision to turn to the institution of bankruptcy and thereby joined the movement that got a name of the "march of insolvent retailers." Given that many stores in the United States have been closed since spring, bankruptcy is increasingly becoming a legal way out of this situation.

It is known that Lucky Brand, which has filed for bankruptcy, intends to sell the company for no less than $ 140 million. The company has already completed a transaction related to the alienation of intellectual property in favor of the Authentic Brands Group. Under the agreement, it is planned to sell the operating assets that should be acquired by the Sparc Group, currently managing the Aéropostale and Nautica trademarks.

According to the court materials, the deal with Authentic Brands will become the basis for the future bankruptcy auction of the fashion retailer, which is scheduled to be completed in August. The company’s executive director, Matthew Caness, noted that the pandemic and its consequences had a great impact on sales, and the business, unfortunately, was far from recovering.

It is known that Lucky Brand plans to close 12 stores leases of which were paid on time, but at the same time were very burdensome for the company.

In total, the company has 112 outlets, 98 of which are located in North America. The amount of debt is $ 181.97 million.

Another fashion brand, G-Star Raw, which specializes in selling denim clothing, has also filed for bankruptcy. The company was unable to agree with landlords on a rental payments’ reduction during the pandemic. Owning 30 stores, the company began to slowly sink to the financial bottom under the weight of the debt burden.

The Chief Executive Officer, Nicole Clayton, reported in the court documents that the crisis had undermined the company’s business, given the need to rebuild the stores that were hit by looting. This is, first of all, about the unrest that took place in the USA in May and June.

In addition to the rental problems, many retailers of the US are experiencing a liquidity crisis.

Limited liquidity, experts say, has led to restrictions on the ability to purchase new products from suppliers. And although the similar problems are felt throughout the world, clothing retailers have been hit hardest. If other retail chains began to grow after the lifting of restrictions and unprecedented mass closures that lasted several months, clothing sellers were left out. Their sales continue to be significantly lower than last year, while other retailers are ready to cope with the drop in sales. Taking on new debts and compensating for the rental payments, fashion brands are facing a full-blown financial crisis. The experts predict the imminent bankruptcy of the clothing retailers, including such well-known US brands as RTW Retailwinds, Tailored Brands and Ascena.