RPR&C In The Media


The Guardian – Delia’s, a 1990s teen fashion icon, liquidates stores as stock falls to one penny – Quote by Jerry Reisman

December 8, 2014 Posted in: RPR&C In The Media


December 8, 2014

Delia’s, a 1990s teen fashion icon, liquidates stores as stock falls to one penny


By Heidi Moore

The teen retailer Delia’s, a beloved purveyor of flowered dresses and chunky shoes for young women in the 1990s, is seeking Chapter 11 bankruptcy protection and plans to sell all its merchandise and shut down.

The trend-driven company, which was founded in 1993 as a direct-sales business with a popular catalogue, said on Monday that it failed to find a buyer for the business or to arrange financing that would save it. CEO Tracy Gardner, who is a former J Crew executive, and chief operating officer Brian Lex Austin-Gemas resigned on Friday.

“Delia’s Chapter 11 bankruptcy filing just before Christmas is a smart move by the teenage retailer and its lenders,” said Jerry Reiman, a partner and retailing/bankruptcy law expert at Reisman, Peirez, Reisman & Capobianco. “By filing for bankruptcy protection and liquidating just before Christmas it will be able to clear out its merchandise and inventory during the busiest shopping time of the year when all customers will be looking for a bargain.”

The company, based in New York, has 92 stores in malls around the country. They will all be liquidated and sold: Delia’s signed a deal with Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners to liquidate its merchandise and dispose of its furnishings and equipment.

Delia’s highest sales were in 2006, when the company made $258m. By 2013, sales had tanked 47% to $137m. The company has had four years of losses.

Delia’s attempted a turnaround last year with the support of hedge-fund manager Whitney Tilson, who put his money behind Gardner to fix what he told BuzzFeed was “a decade of mismanagement”.

Tilson bought 2.2m shares at $1.05 each in July 2013. The shares are now down to one penny each.

Retailers, especially those that cater to teenagers, have been hit hard in the wake of the recession and almost all of them have posted lackluster sales.

Abercrombie & Fitch, which started a turnaround in 2006 under CEO Mike Jeffries, has fallen on hard times as foot traffic in its stores, particularly in malls, has fallen off. Last week Abercrombie reported a 25% drop in sales. The retailer has struggled to hold on to the image of the chosen wear of high school’s “cool kids” that has been core to Jeffries’s branding strategy. Jeffries made controversial comments that he would not welcome overweight shoppers.

Former catalogue-based businesses that own stores, such as Sears and Delia’s, have done particularly badly. Sears, which owns Kmart, has recorded four straight years of losses, is relying on loans from its hedge-fund manager CEO, Eddie Lampert.

Delia’s said in its bankruptcy filing that it has $74m in assets and $32.2m in debt.