Lord & Taylor files for Chapter 11 bankruptcy
Lord & Taylor, known for its upscale fashions and extravagant holiday window displays, sought bankruptcy protection from creditors after a turnaround effort faltered amid the coronavirus pandemic.
The oldest U.S. department store filed for Chapter 11 protection in Richmond, Virginia, on Sunday and will submit a reorganization plan with the court. The company, founded in Manhattan by two English immigrants in 1826, said it had about US$137.9 million of debt obligations.
Lord & Taylor’s owner, fashion start-up Le Tote Inc., filed for Chapter 11 along with the retail chain. Le Tote bought the rights to the company’s stores, brand and e-commerce site from Saks Fifth Avenue owner Hudson’s Bay Co. for US$71 million last year.
The company, with 38 stores and 651 employees as of the filing, joins a burgeoning list of department-store casualties tied to the virus, which turned malls into ghost towns. Former fashion stalwarts like J. Crew Group Inc. and Neiman Marcus Inc. already filed for bankruptcy protection this year.
Lord & Taylor closed all of its stores temporarily in March as governors ordered residents to shelter in place to combat the spreading virus. In court filings, company officials said they are slowly starting to reopen some stores and have recalled 400 employees.
San Francisco-based Le Tote offers fashion-apparel rentals. Executives at the company have planned to cut the number of Lord & Taylor stores and target younger women with luxury try-on studios, beauty subscriptions and rental drop-off points.
Under the deal with Hudson’s Bay, the seller agreed to cover Lord & Taylor’s rent for three years, saving Le Tote $58 million annually. Le Tote said in a court filing Sunday that its companies reported revenue of about US$253.5 million in 2019.
The economic body blows wrought by the Covid-19 pandemic pushed Le Tote into putting Lord & Taylor into Chapter 11, Ed Kremer, the company’s chief restructuring officer, said Monday in court filings.
Le Tote officials were grappling with “carrying the increased expenses associated with the acquisition, as well as the brick-and-mortar assets which were unusable for a substantial period of time,” Kremer said in the filings. “These unprecedented market developments, compounded by lower-than-expected financial results, adversely impacted liquidity” and left the retailer drowning in debt, he added.
Le Total officials cut a deal with lenders to allow them access to cash to fund an effort to sell the company and “maximize value for all stakeholders,” Kremer added.
The case is Le Tote Inc., 20-33332, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
--With assistance from Adam Cataldo.