FullBeauty expects to file Chapter 11
- FullBeauty Brands announced on Thursday that it has obtained support from debt and equity holders to file Chapter 11 and enter into a new restructuring support agreement "following expiration of the solicitation period on or about January 24, 2019," according to a press release. Restructuring will reduce the company's debt by nearly $900 million.
- FullBeauty Brands, which is owned by Apax Partners and Charlesbank Capital Partners, has a number of brands under its umbrella including Woman Within, Roaman's, Jessica London, Swimsuits for All, Ellos, KingSize, BrylaneHome and fullbeauty.com. The company announced additional steps to accelerate a turnaround including enhancing product assortment, expanding distribution efforts and introducing a new senior management team.
- The company has secured a $30 million loan and emphasized that it, "continues to have adequate liquidity to meet its financial obligations to vendors, suppliers, and employees." Sales and operations will continue throughout the restructuring process, the company stated in the press release.
FullBeauty Brands has been navigating financial difficulties and increased competition for a number of years. In November of 2018, the plus-size apparel retailer missed a payment on a $345 million loan, which led to a downgrade in the company's debt rating. At the time S&P analysts forecasted that the company would enter into a restructuring process by the end of the year.
Prior to that, Moody's Corporation noted that the company was saddled with debt from a 2015 buyout by private equity firm Apax Partners.
The bankruptcy filing comes at a time when plus-size apparel is becoming more widely available and competition is increasing, with large companies recognizing its value and finally responding to consumer demand. Coresight Research reported that the segment reached over $21 billion in 2016 and evaluated that it hasn't yet reached its $46 billion market potential.
This past fall Walmart made a play for capturing more market share in the space when it acquired direct-to-consumer plus-size brand Eloquii. Additionally, Old Navy added plus-sizes to in-store offerings, J. Crew partnered with direct-to-consumer brand Universal Standard to expand sizes, and Nordstrom added extended sizes to some of its locations.
While FullBeauty assures consumers that sales and operations will continue as normal, a number of the brands in its stable are currently throwing outlandish sales. FullBeauty.com's 'Let it Snow' sale is offering up to 80% off (including clearance), JessicaLondon.com's end-of-season sale has items up to 75% off, and Roamans.com's winter sale is up to 70% off. Other retailers outside of the plus-size category are also throwing after season sales, but the depth of discount across outlets may hint at a move to drop product in anticipation of the bankruptcy process.
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