UPDATE: November 11, 2020: Hilco Streambank is marketing the intellectual property assets of Stein Mart after the retailer signed a $4 million deal with a subsidiary of Retail Ecommerce Ventures (REV) to be the stalking horse bidder for Stein Mart's IP.
Bids, which have to surpass $4.2 million to qualify, are due by Nov. 16, and an auction is set for Nov. 18.
According to Hilco's marketing materials, Stein Mart's digital operation – which could be revived by an IP buyer – made nearly $82 million last year. Sales of its private labels, also up for sale in the auction, collectively were about $51 million in 2019.
Dive Brief:
- Stein Mart has a $4 million bid for its intellectual property that would set the baseline for an auction, according to a court filing.
- The stalking horse bidder, a Delaware corporation formed in August called "Stein Mart Online, Inc.," lists as its CEO Alex Mehr, one of the founders of Retail Ecommerce Ventures (REV). Mehr and Tai Lopez, also a REV founder, are both listed as contacts for the company in court papers.
- Included in the retailer's IP sale are its domain names, trademarks, customer files, vendor information, marketing emails, social media handles and other assets.
Dive Insight:
Stein Mart has been looking to sell its IP in bankruptcy as it winds down its business and closes its physical stores. In October, the company tapped Hilco Streambank to market the assets, which would make it yet another retailer to seek a second life for its brand after liquidating in bankruptcy.
Mehr and Lopez, whose firm this year also bought the IP for Pier 1 and Modell's out of bankruptcy, appear to have been waiting in the wings for Stein Mart's IP. According to state records, the company created in Delaware to buy the Stein Mart assets formed about two weeks after the retailer filed for bankruptcy in August with plans to liquidate.
REV said earlier this year that its brands have generated more than $1 billion in sales since its founding in 2019 by Mehr and Lopez, who have backgrounds in digital marketing with YouTube and Facebook. The firm's goal, as it eyes more distressed retail brands, is to "create thriving online stores where physical-first operations previously failed." REV also bought the Dressbarn brand from Ascena Retail Group last year and owns the Linens N Things brand, among others.
For those firms that specialize in buying IP assets out of bankruptcies, 2020 has brought plenty of market opportunities with some major retail names liquidating in bankruptcy. Taking on a brand can be economical given the cost, time and effort involved in building a brand from scratch. An existing brand name also gives a leg up to online pure-players.
As for Stein Mart, the discount retailer was sent into bankruptcy after a second wave of COVID-19 hit states where it had an outsized portion of its stores. That came after the financial turmoil following the pandemic's arrival in the U.S. derailed a deal for Stein Mart to be acquired by a private equity firm.
Whether the retailer could succeed was a purely digital player is an open question. "How many people know Stein Mart? This has always been a problem for Stein Mart," Neil Saunders, managing director with GlobalData Retail, said in an October interview. "The brand just doesn't have the visibility of other [off-price] brands. When there's a physical store, even if you're not familiar with the brand, people will go in. 'Oh, yes, I'll have a look around.' 'Oh, this is interesting, I'll buy it.' Online, you have to know that the brand exists. And you have to have it foremost in your mind to go to it."
Stein Mart has proposed a bid deadline of Nov. 16., an auction starting Nov. 18 and a bankruptcy court hearing to consider the sale on Nov. 23.
