UPDATE: January 7, 2019: David's Bridal announced via press release that the company's restructuring plan was confirmed by the United States Bankruptcy Court in the District of Delaware. The retailer will slash debt by approximately $450 million.
UPDATE: November 19, 2018: David's Bridal voluntarily filed for reorganization on Monday under Chapter 11 of the United States Bankruptcy Code in the District of Delaware, according to a press release emailed to Retail Dive. The retailer secured $60 million in financing from lenders and asserted that "brides will receive dress orders on-time" and that there will be "no impact on customer service."
Dive Brief:
- David's Bridal announced on Thursday it reached a restructuring agreement with lenders and plans to file for Chapter 11 bankruptcy at an undisclosed time, according to a press release emailed to Retail Dive.
- As part of the agreement, which the retailer plans to pursue in bankruptcy court "in the near future," the retailer's debt will be slashed by over $400 million.
- The company stated that it has sufficient funds to meet business requirements and all 300 stores will remain open throughout the restructuring process.
Dive Insight:
David's Bridal's time was up yesterday as its 30-day grace period came to a close. The window of time was granted after the retailer made a "strategic decision" to skip a debt payment on $270 million in unsecured notes that was due Oct. 15. The company went into negotiations with lenders to secure a financial restructuring plan that would reduce its debt.
"The restructuring plan is the culmination of extensive discussions with our lenders, noteholders and equity holders, and it provides an expedited path to significantly reduced debt and enhanced financial flexibility," CEO Scott Key said in the release.
The agreement stipulates that term loan lenders will provide $40 million in new financing so supply chain operations won't be interrupted and vendors will continue to be paid. The company stated that all brides will receive their orders on time and stores will remain open for appointments.
The announcement comes at a time of significant change in the wedding industry as consumers are increasingly turning to online shopping or direct to consumer options for their wedding gowns. A dramatic indicator of the shift in behavior happened during the summer of 2017 when bridal retailer Alfred Angelo unexpectedly filed for Chapter 7 and abruptly liquidated its assets — leaving brides stranded without their gowns and out of options. Two years ago, J. Crew shut down its bridal business. More recently, Weddington Way — acquired in 2016 by Gap — said it would close all its test stores and shut down its website.
Even though David's Bridal has been a recognizable brand in wedding wear for over 60 years, the company has been consistently showing cracks in its performance. In 2016, Teamsters and consumer activists protested the Great Bridal Expo in Washington, D.C., to warn the public of the company's troubled finances. Additionally, the company had a quick succession of CEO's including Pamela Wallack (who later joined The Children's Place), followed by former Gap executive Paul Pressler who stepped down from the role and was replaced by Scott Key.
The business has made attempts to course-correct by bolstering specific services. This past summer David's Bridal acquired tech startup Blueprint Registry to increase wedding registry capabilities and to better position the company to be competitive even as it was in the midst of getting downgraded deeper into junk territory.
