David’s Bridal files for Chapter 11 bankruptcy protection
David’s Bridal filed for bankruptcy protection on Monday, with a promise that all dress orders would be delivered on time and bridal appointments would not be affected.
The filing, which was expected, comes as the retailer is struggling with a heavy debt load, increased competition from lower-priced competitors and changing bridal fashions. It is part of a previously arranged deal that David’s Bridal reached with its lenders that will reduce its debt by more than $40 million and provide significant financial flexibility to support long-term growth prospects. The retailer expects to complete the court-supervised process by early January.
David’s Bridal has received commitments for $60 million in new debtor-in-possession financing from existing lenders, along with a recommitment of its existing $125 million asset-backed loan, which will help it stay open for business during restructuring. The retailer said that customers can continue to shop across its more than 300 and online without disruption. Orders will arrive on time and bridal appointments will not be impacted.
“Today’s announcement is just the next step in our efforts to proactively secure David’s Bridal for a long, successful future,” said CEO Scott Key. “We are implementing our consensual restructuring plan from a position of strength and, with the support of our lenders, noteholders and equity holders, the plan will allow us to reduce our debt significantly while continuing to run our business as usual.”
Looking ahead, Scott said, the retailer will be able to allocate even more of its resources “towards making strategic investments in digital technologies and talent that will drive long-term growth and operational excellence at David’s Bridal.”
Private-equity firm Clayton Dubilier & Rice LLC acquired David’s Bridal in a 2012 deal valued at $1.05 billion.
Bernie Sanders targets another big retailer
U.S. Senator Bernie Sanders has the world’s largest retailer in his sights.
The senator from Vermont introduced a bill on Thursday that would prohibit large companies from buying back stock until they pay all employees at least $15 an hour. The proposed legislation, called the “Stop WALMART Act,” is co-sponsored by Rep. Ro Khanna, D-Calif., and would also require large employers to give workers up to seven days of paid sick leave for themselves or to care for a family member, and cap executive compensation at 150 times the median employee wage. Under the bill, companies with more than 500 workers would face these new restrictions.
Sanders fired off a series on tweets this week in which he railed against the federal minimum wage – $7.25 per hour – and the Walton family. Among his tweets was one that stated: “The Walton family of Walmart is the wealthiest family in America, worth $180 billion. Middle class taxpayers should not have to subsidize Walmart’s horrendously low wages to the tune of at least $6.2 billion every year.”
In a statement, Walmart noted it has increased its starting wages by more than 50% in the last three years and currently has an average hourly total compensation of more than $17.50 an hour.
“At the same time, we’ve also added new benefits like paid time off, advanced job training, paid family leave and college for $1 a day,” the company said. “In addition, our associates continue to earn quarterly cash bonuses – more than $625 million last year alone. We have been very deliberate about our job offerings and we will continue listening to our people and investing in the training, benefits and wages that they tell us are important.”
In calling out Walmart, Sanders is employing a strategy similar to what he employed against Amazon back in September when he introduced the STOP BEZOS Act, which would have imposed a 100% tax on large employers equal to the amount that their workers receive in public assistance benefits. The bill, like this latest one, had almost no chance of passing the Republican-controlled Senate. But in October, Amazon announced that it was increasing its minimum wage to $15 for all full-time, part-time, temporary and seasonal employees across the United States.
Walmart also said it offers a wide variety of career opportunities to people of every background, low barriers to entry for a first job, and competitive wages and benefits.
“As much as a starting wage is important, it’s just that – a starting point,” the company said. “Our associates have told us that it’s about much more than just a starting wage. It’s also about benefits, scheduling, training and the opportunity to advance in their jobs – all important parts of a meaningful job experience.”
We want to be the type of company that makes it easy for people to get in the door and empowers them to grow as far and as fast as their skill and hard work will take them. Last year we promoted more than 230,000 people to jobs of greater responsibility and higher pay, and more than 75% of our store management teams started as hourly associates.”
In response, the e-commerce giant raised its minimum wage
Sears gets a little more time
It’s not over yet for Sears Holdings Corp.
The retailer’s plan to auction off at least 400 stores won approval Thursday at a bankruptcy court hearing. Sears plans to use the proceeds from the sale to stay in business — at least for the time being.
A committee of Sears’ creditors had objected to the plan and argued that the bankrupt retailer should immediately start liquidating to limit its ongoing losses, reported cnn.com. The bankruptcy court judge said he will hold another hearing a week before Christmas to consider whether to go ahead with Sears’ effort to stay in business or start the process to close all its remaining stores, the report said.
Sears also disclosed that it has arranged for a $350 million loan from finance company Great American Capital Partners to fund operations during the bankruptcy process. The loan is an important part of the retailer’s play to remain a viable going concern as it heads into the holiday season.
Great American is owned by B. Riley Financial Inc., which provides financing and often serves as a liquidator when a retailer collapses, Bloomberg reported.