RTW Retailwinds, (formerly New York & Co.), has agreed to sell its e-commerce business and intellectual property to apparel brand firm Sunrise Brands, RTW announced on Tuesday.
Pending approval under Chapter 11, which RTW filed last month, Sunrise will purchase the assets with $20 million in cash plus the assumption of liabilities, including honoring gift cards, according to an RTW press release. A hearing at the U.S. Bankruptcy Court for the District of New Jersey is expected in September.
The business includes the online sales and rental sites for century-old New York & Co. and plus-size retailer Fashion to Figure. Sunrise Brands develops private labels for retailers and also runs apparel brands including Eva Longoria, Seven7 Jeans and American Rag.
The rebranding of New York & Co., once a stalwart apparel retailer first introduced about a hundred years ago, hasn't done much for RTW's prospects in the last couple of years.
Despite its efforts to boost e-commerce and shrink its physical footprint from 432 stores at the beginning of 2018 to 387 — a tricky business in apparel — RTW continued to experience headwinds rather than tailwinds. Sales declined steadily in the past five years, and last year operating loss reached nearly $62 million. This year has also been tough, as RTW shook up its C-suite and fell out of compliance with the New York Stock Exchange's trading rules when its shares dipped below $1.
The name change was meant to signal the company's expanded portfolio, which included 7th Avenue Design Studio, Soho Jeans, Soho Street, Eva Mendes Collection and Gabrielle Union Collection, as well as digital pure plays, including a Kate Hudson collection dubbed Happy x Nature and Uncommon Sense, a lingerie brand. The company exited the Uncommon Sense brand soon after its debut, at a cost of $4.2 million.
Growth in apparel sales has been steadily deteriorating in recent years in the face of changing priorities as middle-income earners saw discretionary funds squeezed and trends shifted toward wearing casual clothing throughout the day, including at work. The pandemic, which has challenged consumers further and forced nonessential retailers to lock their doors for much of the first quarter, has hit vulnerable apparel retailers especially hard.
RTW's challenges may have been presaged by L Brands' 2002 sale of the New York & Co. business after 17 years of ownership, however, considering that company, founded by apparel titan Les Wexner, has a track record of ditching clothing brands on the decline. Ascena similarly has struggled since acquiring a couple of brands from Wexner's portfolio and is also now in bankruptcy.
Sunrise Brands tried to grab L Brands' namesake The Limited during its bankruptcy process three years ago, but was outbid by Sycamore Partners. The private equity firm developed The Limited, once a powerhouse in women's apparel, as a private label sold by its Belk department store.