Nine West files for bankruptcy; to sell namesake brand
Massive debt has finally taken its toll on Nine West.
Nine West Holdings Inc. said Friday that it has filed for Chapter 11 bankruptcy protection, with a plan to sell its namesake and Bandolino footwear and handbag businesses as part of its reorganization to Authentic Brands Group. The company said it plans to revamp its capital structure around its profitable businesses, including Anne Klein, Kasper Group, The Jewelry Group and One Jeanswear Group.
“This is the right step to address our two divergent business profiles,” said Ralph Schipani, CEO, Nine West Holdings. “We will retain our strong, profitable and growing apparel, jewelry, and jeanswear businesses and continue to operate them under a new capital structure so that we can leverage their existing strengths to drive even greater growth.”
Nine West has one of the highest leverage ratios in the industry, with debt exceeding 19 times adjusted earnings, according to Moody’s Investors Service. (Its Chapter 11 filing listed debts of more than $1 billion.) The company missed a debt interest payment in March, setting off a 30-day period which the company must either make the payment or face bankruptcy.
“Once we complete the reorganization process, our company will have meaningfully reduced debt and interest costs and be well positioned for the future,” said Schipani.
Nine West was bought by Sycamore in 2014, when the private equity firm acquired the brand’s parent company, Jones Group Inc., in a deal valued at $2.2 billion.
Authentic Brands, which recently announced it would buy the Nautica brand from VF Corp., is the owner and licensor for a diverse range of brands including Frye, Jones New York, Juicy Couture, Greg Norman and Frederick’s of Hollywood. It will submit an initial bid for Nine West and Bandolino, and an auction will test the market for higher offers.
Nine West has received $300 million in debtor-in-possession financing and has entered into a restructuring agreement with the parties that hold more than 78% of its secured-term debt and more than 89% of its unsecured term debt, which the company said will provide it with the liquidity needed over the course of its case.
Albertsons withdraws IPO plan
Albertsons Companies Inc. filed Friday to withdraw its plan for an initial public offering, MarketWatch reported.
The food and drug retailer withdrew its plan because of its previously announced deal to merge with Rite Aid Corp., which was announced in February.
Albertsons said the registration statement for the IPO, which was last amended in November, had not yet been declared effective by the Securities and Exchange Commission, according to MarketWatch.
Sally Beauty cutting staff; to focus stores on hair color/care
Sally Beauty Holdings is reducing headcount, primarily at its headquarters, as the first part of a cost-reduction plan.
In addition to job cuts, the plan includes cost savings initiatives focused on “organizational efficiencies, sourcing of product and brands for resale, indirect procurement, store operating expenses, and inventory management.” Sally expects annual savings to be in the range of $14 million to $15 million. The company expects to reinvest the savings in technology to improve customers’ in-store experience and accelerate online growth, and store employee wages.
In addition, Sally Beauty plans to reinvest in strategic initiatives to accelerate growth in its core hair color and hair care categories, which, which, combined, represent more than half of Sally’s revenue in the U.S. and Canada.
“We have dedicated a substantial amount of work over the last several months into the development of initiatives that we expect will generate meaningful financial benefits, within both product margin and G&A expenses,” stated Chris Brickman, president and CEO. “We plan to utilize these benefits to maintain our profitability and fund the key investments required to transform the business and intensify our focus on our most differentiated categories — hair color and hair care.”
Brickman said that Sally’s primary goal “is to have every customer feel confident in her ability to color and care for her own hair, and we will tailor our assortment, service and education to ensure we are her go-to store for that purpose.”
“Our unique assortment and demonstrated expertise have established us as the market leader in hair color and hair care, and these categories have sustained healthy growth while other categories have faced increasing competition,” he said.
Sally Beauty sells and distributes through 5,177 stores, including approximately 184 franchised units, and has operations throughout the United States, Puerto Rico, Canada, Mexico, Peru, Chile, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain and Germany.