Gordmans files for Chapter 11 bankruptcy protection
Midwestern apparel and home décor retailer Gordmans Stores, Inc. on Monday announced it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nebraska.
The Omaha-NE-based discount department store, which runs 106 stores in 62 markets and 22 states, has a roughly $85 million debt load, much of it due in 2020.
Private equity firm Sun Capital bought the company in 2008 and took it public in 2010. After a secondary public offering in 2012, the company spent the next two years boosting its store count in the region by a third, launching a national website in 2015.
Founded just over 100 years ago and once known as Richman Gordons, the discount department store is a fixture of the Midwest. But after its expansion under Sun Capital, growth slowed and it has since struggled with sales for several quarters. Sales fell 75% in the past year alone, and in January, the company announced an unspecified number of job cuts amid “the current sluggish retail environment.”
Though not unusual for a private equity-owned company, Gordmans is also 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.
In recent years, as Gordmans has taken on debt and expanded, rival J.C. Penney has been trimming its store count and more or less righting its ship by offering customers appliances and Sephora concessions. Department stores are struggling in general as mall traffic has declined, the apparel market has softened and as off-price retailers like those of TJX Cos. have grabbed market share. Discount and mid-market department stores are in a particularly precarious position. Kohl’s and Macy’s in particular; Macy’s recently slated 100 stores for closure and Kohl's lowered its year-ahead guidance after a dismal holiday season.
"Until further notice, all Gordmans stores are operating as usual without interruption," Gordmans CEO Andy Hall said in a Monday statement. "The management team and all of our associates remain committed to continuing to provide great merchandise and service to our guests during this process."
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