Fort Lauderdale, Pembroke Gardens Mall, Lucky Brand Jeans exhibit. (Photo: Jeffrey Greenberg / Education Images / Universal Images Group via Getty Images)
THE ANGELS – Denim retailer Lucky Brand Dungarees filed for bankruptcy, partly blaming its problems on the coronavirus pandemic, and said it had an agreement to sell the company.
Lucky said he plans to close 13 stores and may close more during the bankruptcy process.
Los Angeles-based Lucky filed for Chapter 11 protection Friday in federal bankruptcy court in Delaware.
In a court filing, Restructuring Director Mark Renzi outlined a proposal to sell Lucky to buyers led by apparel retailer SPARC Group for $ 140.1 million in cash and $ 51.5 million in credit. Lucky said the offering would preserve much or all of the company’s current store network.
SPARC operates under the Aeropostale and Nautica brands that are owned by Authentic Brands Group and mall operator Simon Property Group, one of Lucky’s key owners, according to the document.
Renzi said the company has a backup offer, and Lucky asked the court to approve an offer process to see if there are better offers. The company anticipates closing a sale in mid-August.
Lucky Brand operates more than 200 stores in the US, primarily in shopping malls, and sells items at other chains, including Macy’s, Nordstrom, and Costco.
Renzi said Lucky was hurt by a shift among shoppers outside of physical stores, compounded by the temporary closure of stores due to the virus outbreak this spring.
The chain was also affected by limited liquidity, making it difficult to obtain new inventories from sellers. Renzi said some key vendors began demanding payment on delivery or other new terms, increasing financial pressure on the company.
Lucky said he had about 3,000 employees earlier this year, most of them part-time. After stores closed due to the COVID-19 pandemic, the company suspended nearly 2,700 of them and has only recovered about 900.
Lucky was created in 1990 and has since gone through several owners, most recently private equity firm Leonard Green & Partners. Renzi said the company “has generally been profitable” during its 30-year history.
