Teen apparel retail chain rue21 Inc. is the latest retailer to file for Chapter 11 bankruptcy protection in 2017.
Rue21, No. 408 in the newly released Internet Retailer 2017 Top 500, announced the filing late Monday night. In its Chapter 11 filing in U.S. Bankruptcy Court for the Western District of Pennsylvania, rue21 lists its estimated assets and liabilities in the $1.1 billion to $10.0 billion range. Wells Fargo makes up two of its three largest creditors, with rue21 owing the financial institution more than $249.7 million.
As part of its efforts to restructure, the retailer is in the process of closing 400 of its 1,179 store locations, or 33.9% of its total store fleet.
The retailer’s online operations will not be impacted by the filing, vice president and general counsel Ben Gross says.
“We regard our e-commerce site as our biggest store, which continues to see double-digit year-over-year sales increases,” he says. According to Top500Guide.com, rue21 generated $55.0 million in online sales in 2016, up 40.0% from an Internet Retailer-estimated $39.3 million the previous year.
The filing comes eight months after rue21 shook up its leadership team, ousting longtime CEO Bob Fisch, who had been at the helm for 15 years, and replacing him in the interim with chief financial officer Keith McDonough. McDonough, meanwhile, left rue21 in April according to his LinkedIn profile. McDonough has since been replaced by Melanie Cox.
“Even in a challenging environment, we are fortunate that rue21 has highly relevant brands, an enthusiastic and loyal customer base, and hundreds of highly performing stores,” Cox said in announcing the bankruptcy filing. “The agreement with our lenders represents their confidence in rue21’s future success even at a time of significant retail industry change.”
This is the second time in the past three years that Cox has taken over as the CEO of a financially troubled apparel retailer. Cox was named CEO of apparel retailer The Wet Seal LLC in August
2015, eight months after the retailer filed for bankruptcy for the first time. Wet Seal filed for bankruptcy again in February of this year. Investment firm Gordon Brothers bought Wet Seal’s intellectual property for $3 million at an auction in March.
Rue21 is the ninth retailer to file for bankruptcy in what has been a tough 2017 for retailers, joining Limited Stores LLC, Wet Seal and hhgregg Appliances Inc.
Here’s a look at the retail chains that have filed for bankruptcy so far this year:
For more on why companies are buying financially troubled retailers and what is being done to breathe new life into those retailers, check out “Brand Revival” in the March issue of Internet Retailer magazine.Favorite