After a tumultuous year and loaded with debt, Alex and Ani filed for bankruptcy in Delaware Wednesday and put itself up for sale. The jewelry retailer has inked a restructuring support agreement with its debt holders and equity sponsors for a financial and operational restructuring, according to the release and court documents.
The company said in a press release that it intends to operate "its currently open stores and its website as usual during the court-supervised process." According to court documents, Alex and Ani has about 74 store leases, with about 25 still closed due to the pandemic.
The retailer, known for its charm bracelets, does intend to evaluate existing leases and reject those deemed "uneconomic," per court documents. In 2019, 43% of its revenue came from wholesale and 45% from e-commerce, mostly its own site, the company told the court.
The merchandising at Alex and Ani, founded in 2004, is fairly simple: The retailer mainly sells one-size-fits-all wire charm bracelets. But its operations over the past decade have been anything but.
The jewelry became quite popular by 2010 or so, fueling growth from 2010 to 2015, per bankruptcy court documents. But things were also falling apart. The company points to an extreme level of executive turnover starting in 2014, troubles with inventory management that meant "a large percentage of wholesale orders" went unfulfilled, and a major decline in footfall to brick-and-mortar stores as major reasons for its filing. The retailer has also been tied up in lawsuits from ex-employees, with one, by a former acting chief operational officer seeking over $1 million in damages, still in litigation, per the filing.
Founder and ex-CEO Carolyn Rafaelian, who owned the company until 2012 when a stake was sold to private equity, has agreed to a resolution of her legal claims against the company and part-owner Lion Capital pending approval of the bankruptcy court. Under the agreement, she would also sell her remaining 35% stake, per the documents.
Significant debt has also hobbled the company, and Alex and Ani has been at the restructuring negotiating table previously to avoid defaulting on its obligations and skirt a bankruptcy filing. A string of bad luck last year, starting with a ransomware virus and immediately followed by the coronavirus pandemic, interrupted those efforts, the company said in its court documents. Last year revenue fell 40%, the company also said.
Its current capital structure results from the 2019 out-of-court restructuring, with about $127.4 million outstanding funded debt obligations, including capitalized interest, consisting of about $20.4 million under a first lien credit facility, $25.2 million under a second lien credit facility and $81.8 million under a third lien credit facility.