Avenue Stores files for bankruptcy; looking for a buyer
Avenue Stores is changing its business model.
The plus-size women’s apparel retailer filed for Chapter 11 bankruptcy protection as it looks to transform its business into an e-commerce-only platform. Avenue said it intends to use proceedings to run the going-concern sale of its e-commerce business and an orderly wind-down of its 222 remaining physical locations. Store closing sales are underway, with all locations due to close by the end of September.
Avenue said its online division, which includes three sites (avenue.com, cloudwakers.com and loralette.com) will continue to operate while it looks for a buyer to acquire the “profitable” business.
In a statement announcing the filing, Avenue president and CFO David Rhodes said declining store traffic, unfavorable real estate obligations, increasing labor costs and growth in both general and specialty competitors culminated in a “significant decrease in physical store productivity after many years of previously solid financial performance.”
“At the same time, Avenue.com accounts for roughly one-third of Avenue’s business with a strong and growing revenue base that has continued to enjoy solid margins and profitability, making it clear that a shift to an e-commerce-only business model is the most viable way to continue serving Avenue’s loyal customers,” Rhodes added.
The company has secured a debtor-in-possession financing commitment of up to $11 million from its existing pre-petition lender which, when approved by the court, will fund its ongoing operations and administration of the reorganization proceedings.
Configure Partners has been retained as Avenue’s investment banker to advise and assist the retailer with the process of soliciting buyer interest and obtaining bids for the company’s continuing assets and operations to be sold subject to court approval.