Global restructuring, investment, advisory and branding firm Gordon Brothers topped a stalking horse bid from Canadian apparel retailer YM last week with a $3 million bid at teen apparel retailer Wet Seal’s bankruptcy auction Thursday, according to a press release.
Judge Christopher S. Sontchi of the U.S. Bankruptcy Court in Wilmington approved the purchase, The Wall Street Journal reports.
Gordon Brothers, a 100-plus year-old Boston-based company, says it will “rebuild and reposition the brand and develop a unique new business model to best position it for future success,” according to a statement from the company’s president of brands, Ramez Toubassy.
Gordon Brothers' best known brand acquisition is probably Polaroid. Once a vertically operating manufacturing company based on instant-photo printing technology, the company went bankrupt twice in the early 21st century as digital photography surged. But Polaroid has remained an iconic brand. Gordon Brothers and its partners have taken Polaroid’s brand essentials of “instant, sharing, fun and innovation” as the basis of its comeback through a series of strategic partnerships.
Wet Seal’s challenge is likely more straightforward — it’s an apparel brand and not one that involves technology — but the contemporary apparel space aimed at teens is a tough space to conquer.
“The whole apparel market is very challenged. It’s overstored and oversaturated,” Shelley E. Kohan, VP of retail consulting at store analytics firm RetailNext, told Retail Dive earlier this year. “Meanwhile, fast-fashion is trend-right and price-right — they hit it right 80% of the time — while for Wet Seal, Gap and some of these other markets, I don’t know what the call to action is for the consumer. And that’s what you have to have today — something that pulls the shopper into the store.”
Gordon Brothers, for its part, expressed confidence in the long-term viability of the teen apparel category, despite its challenges, and noted that Wet Seal in particular had more than $500 million in revenue and 478 retail locations as recently as 2014, calling it a “pioneer in fast fashion… known for its surf-and-sun aesthetic targeted at fashion focused teens.”
A brand acquisition that could lead to some kind of licensing deal was a likely outcome for Wet Seal in what was its second bankruptcy in just over two years, Jasmin Yang, an associate attorney at law firm Snell & Wilmer who has helped several clients in various aspects of bankruptcy and restructuring, told Retail Dive in January.
“I think there is some goodwill, and I think one of Wet Seal’s most valuable assets would be their trademark, just as with American Apparel — their intellectual property,” she said. “If someone were to buy it and enter into a licensing agreement with a Target or a Wal-Mart, that might be a strategic and creative use. It’s probably not valuable enough to sell to fix all their problems, but licensing is definitely one creative solution. The way teenagers shop is just different now.”