Lord & Taylor, the oldest department store in the U.S., and owner Le Tote and its various entities on Sunday filed for bankruptcy under Chapter 11, according to documents filed in the U.S. Bankruptcy Court in the Eastern District of Virginia.
Privately owned Le Tote, an online apparel rental company, in court documents said it notched about $253.5 million in revenue last year. Thanks to last year's $75 million acquisition of Lord & Taylor, it runs 38 physical stores as well as the Lord & Taylor and Le Tote websites.
The company has 651 employees and arrived at bankruptcy court with funded debt obligations of about $137.9 million. The real estate arm of previous owner Hudson's Bay Co. is its largest shareholder, with a 27.6% interest.
The COVID-19 pandemic seems to have sunk what was a promising, if tricky, new venture for Lord & Taylor.
The department store has been weakened by decades of challenges in the segment and years of neglect by HBC. Le Tote was founded in 2012 and offers apparel rental starting at $59 per month, but was apparently turning to brick and mortar for growth. Before its decline, Lord & Taylor, founded in 1826, had become known for dressing stylish middle-income women and for groundbreaking moves like hiring a woman in a key executive position in 1945.
Some analysts believed the tie-up could have worked. In Le Tote, Lord & Taylor finally had owners that valued it as a retailer. That stands in contrast to HBC, which seemed to appreciate it mostly for its real estate; the Canadian retail company last year sold off Lord & Taylor's iconic Fifth Avenue flagship in Manhattan for $850 million. Under HBC, Lord & Taylor also entered a head-scratching e-commerce partnership with Walmart.
The department store did also have something to offer Le Tote, including several beautiful mid-century buildings in key suburban shopping locations, as well as a level of merchandising expertise that some experts have said hadn't completely disappeared.
But several forces were working against it, including the reality that consumers have less interest or need to spend their discretionary funds on apparel and the fact that discretionary funds are dwindling for those in middle- and lower-income households. Whatever Le Tote had up its sleeve to revitalize Lord & Taylor likely became a far-off dream once the pandemic forced all nonessential stores to close for weeks.
In court documents, the company said its stores have reopened after shutting them all in March, mere months after closing on the Lord & Taylor acquisition. In May, Reuters reported that some of those stores would be holding liquidation sales. The previous month Le Tote announced layoffs of most its workers at both its namesake company and at Lord & Taylor.