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  • INDUSTRY NEWS

    • On February 20, 2020, it was reported, Victoria's Secret is going private. And the retail industry is losing its longest-serving chief executive. L Brands confirmed it is selling the majority (55%) stake in struggling Victoria's Secret (including the Pink brand and Victoria's Secret Beauty) to private equity firm Sycamore Partners for about $525 million. L Brands will retain a 45% minority stake in the company. Under the terms of the transaction, Victoria's Secret has a total enterprise value of $1.1 billion. The deal means that L Brands will now be responsible only for running its other division, Bath & Body Works, which has been outperforming Victoria's Secret for some time. Once the transaction closes, L Brands CEO Les Wexner, 82, will step down from his post, staying on as chairman emeritus. Wexner, a pioneer of mall-based specialty store retailing and L Brands largest shareholder, is the longest-serving CEO of an S&P 500 company. He opened his first store, The Limited, in 1963, and went on to grow a global retail empire. In 1982, Wexner bought Victoria's Secret, a small lingerie chain on the verge of bankruptcy, for $1 million. Most recently, he has come under scrutiny for his ties to the late financier Jeffrey Epstein, who was indicted on sex-trafficking charges, and the performance of Victoria's Secret, whose sales have been declining since 2017. The chain has been criticized for being out of touch with changing consumer tastes amid new competitors that stress diversity and inclusivity.
    • On February 20, 2020, brand development company Authentic Brands Group and mall developers Simon Property Group and Brookfield Property Partners announced their purchase of fast-fashion retailer Forever 21. A new CEO will be announced in the coming weeks, an ABG spokesperson told Retail Dive in an email. ABG and Simon will each own 37.5%, and Brookfield will own 25% of the retailer's intellectual property and operating businesses, according to an ABG press release emailed to Retail Dive. The final price tag was a bargain at $81 million, reached after no other bidders came forward during the retailer's bankruptcy. Forever 21 is working with landlords to keep stores open "in key regions" and will convert owned stores in Central America, South America, Mexico, the Philippines, and the Caribbean to a licensed partnership model, ABG said in the release. The group also plans an international expansion in South America, Western and Eastern Europe, China, Southeast Asia, the Middle East and India. If Forever 21's new owners were limited to the mall landlords that are part of this deal, it would be tempting to see it as a last-ditch effort to rescue a major tenant from oblivion. But ABG's involvement demonstrates that the bankrupt fast-fashion retailer retains a strong brand. These same players have been here before, when they similarly snagged teen retailer Aeropostale out of bankruptcy and kept more stores open than would have been likely under different owners. In fact, in his statement on the deal Thursday, ABG CEO Jamie Salter called Forever 21 "a powerful retail brand with incredible consumer reach and a wealth of untapped potential." In the same press release, the companies allude to their previous collaboration, saying they are
    • On February 19, 2020, it was reported, sluggish sales trends for its soft flooring products have prompted Shaw Inds. to shutter its residential carpet plant here. Set to permanently close in May, the site employs 275 workers. The company, which is owned by Berkshire Hathaway Inc., is instead turning its focus to its stronger selling hardwood and tile flooring businesses, several news agencies reported. The plan is to relocate the plant's production of residential carpet to other company-owned facilities that have "expanded capabilities and newer equipment," the company said in those reports.
    • On February 18, 2020, it was reported, Pier 1 Imports aimed low when it should've been moving up in the quality and curation spectrum. That's the key takeaway in a bankruptcy court declaration by CEO Robert Riesbeck. "A confluence of operational and strategic factors" contributed to the Top 100 company's Chapter 11 bankruptcy filing Monday, he said, but most significant among them "was a strategy launched under past management to turn to a mass-market merchandising strategy based on high-volume, low-price, lower-margin commodity items." Riesbeck called this a "misguided effort." Prior management was trying to adapt to the changing retail climate by competing head-on with the "low-price, low-curation retailers" in the marketplace. The strategy failed to resonate with Pier 1's core customers, led to a glut of inventory it couldn't move off the shelves and then significant discounting at lower margins. In filing for Chapter 11 reorganization, the long-struggling Pier 1 entered into an agreement with the majority of its term loan lenders "to facilitate an orderly sale process" of part or all the company or possible liquidation. The retailer said it has lined commitments for about $256 million in debtor-in-possession financing from Bank of America, Wells Fargo National Assn. and Pathlight Capital. It's also using the reorganization process to complete the closing of up to 450 stores, or roughly half of all stores, including the closing of all its Canadian locations. Already it has initiated going-out-of-business sales at more than 400 locations, the company said. In his declaration, Riesbeck said the go-forward footprint is expected to be about 540 stores. Pier 1 also is closing two distribution centers in Ontario, Calif., and