Ex-Gordmans CEO, Stage Stores to bid on bankrupt Gordmans
Two bidders have emerged with interest in bidding on Midwestern apparel and home décor retailer Gordmans, which filed for Chapter 11 bankruptcy protection earlier this month: a group led by ex-Gordmans CEO (and the founder’s great-grandson) Jeff Gordman and Texas-based Stage Stores, which owns a suite of local and regional department store chains much like Gordmans.
Both potential bidders are interested in running the Omaha-NE-based discount department store as a retailer, rather than picking off its assets, according to a report by the Omaha World-Herald.
Last week, Gordmans announced it had entered into an agreement with Tiger Capital Group, LLC and Great American Group, LLC for liquidation of inventory and other assets of its retail stores and distribution centers, subject to the bankruptcy court’s approval and depending on whether there are competing offers — which are now arriving.
While neither of these bids represent a sure thing, they share the same advantage: Both, in contrast to the retailer’s agreement with Tiger Capital and Great American, whose offer is for liquidation, are interested in keeping the company in business. “If we can get a going-concern bid, from the perspective of the employees, the community perspective, it is going to be the best thing for the community,” U.S. Bankruptcy Judge Thomas Saladino said at a hearing Monday in Omaha, as described by the Omaha World-Herald.
Not unusual for a private equity-owned company, Gordmans, which runs 106 stores in 62 markets and 22 states, is loaded with debt: Average borrowings during the thirty-nine week periods ended Oct. 29, 2016 were $31.7 million, compared to $19.5 million as of Oct. 31, 2015, according to a Securities and Exchange Commission filing.
Potential bidder Jeff Gordman is from the founder’s family and says that retail is “in his blood,” according to an interview with The World-Herald. “I love this company,” Gordman said. “I am doing it for the most important stakeholders, the employees that are the heart and soul. I feel an obligation to them.” Gordman departed the company abruptly in 2013 amid a dispute with its private equity owner over debt acquisition; he’d sold the company in 2008.
Stage Stores could also be a good fit for Gordmans. The regional department store runs a suite of retail companies much like Gordmans, though it has faced the same challenges that plague many retailers these days. In its most recent quarterly filing, the company reported that net sales fell 9.8% to $34.4 million as same-store sales fell 8.2% and gross profit decreased $19.5 million, or 25.6%.
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