Nine West has told creditors that it has found a buyer for some of its assets and will work to restructure its financing as soon as the sale is complete, according to a report from Debtwire emailed to Retail Dive.
The company hopes to use the proceeds to restructure its debt but is prepared to file for Chapter 11 bankruptcy if necessary, according to reporting from Debtwire and Bloomberg. A spokesperson for Nine West and private equity owner Sycamore declined to comment to Retail Dive.
The timing is likely determined by a looming March 15 payment, according to Debtwire Associate Editor Reshmi Basu, who spoke with two sources familiar with the talks.
Nine West has been working to restructure its debt for a while now. In October 2016 the brand got a reprieve from its lenders in order to help it ride out the holidays in preparation for 2017.
But last year continued to be a tough one for the brand. In February, Moody's Investors Services included Nine West in a list of "retailers at risk," citing the company's "weak operating performance and very high debt and leverage burden," and in September the brand landed on Fitch's Loans of Concern's list of potential retail default candidates. In May, the company announced that investment bank Lazard was evaluating a long-term capital structure solution.
The company does have intellectual property that could yield some relief. About a year ago, Nine West sold off its Easy Spirit brand for an undisclosed amount, and used some of the proceeds to purchase the Kasper Group. The company now hopes to sell off a portion of its remaining intellectual property to help refinance a loan, Debtwire's Basu told Retail Dive in an interview. "Time will tell how it works. They're going back and forth between creditors about how to address maturities," she said, calling the situation "a repeat of what we saw last year."
Unfortunately for Nine West, finances aren't the only problem. In June 2017 the brand hit bottom in terms of customer loyalty, according to data from mobile marketing platform inMarket emailed to Retail Dive. Except for a slight rebound in October, loyalty continued to decrease in the third quarter, and has edged down slightly each month, including during the holidays.
The company, which depends on direct retail sales as well as wholesale, is losing market share amid softening apparel sales and competition from e-commerce players. The company is also looking at cost cuts, and that will inevitably mean closing stores, according to Basu. "You're definitely going to see them closing down underperforming locations — that's the only way to survive these days," she said.
Sycamore acquired Nine West in 2014 for $2.2 billion, along with 34 other Jones Group brands, including Anne Klein, Easy Spirit, Bandolino, Enzo Angiolini, Givenchy, Gloria Vanderbilt, l.e.i., Jessica Simpson, Jones New York, Stuart Weitzman and Kurt Geiger. The firm's investments are heavily focused on retail and consumer brands, many of which have struggled lately as sales shift online, consumers remain careful about spending and retailers scramble to adapt.