Styles For Less on Monday became the latest teen apparel retailer to file for Chapter 11 bankruptcy protection, according to court documents submitted to the U.S. Bankruptcy Court, Central District of California. The company had liabilities between $10 million and $50 million, according to the filing. Styles For Less did not respond to a request for comment from Retail Dive.
News of the filing was anticipated last week when Marc Winthrop, a senior partner at law firm Winthrop Couchot Golubow Hollander representing the company, told Reuters that the company was preparing the documents, adding that the company was seeking a loan that would fund a reorganization of the company.
The 20-year-old retailer based in Anaheim, CA has over 160 mall and outlet stores, according to the company’s website.
It’s a bizarre time for any retailer to file for bankruptcy. With only a few weeks to go until Black Friday — the busiest in-store and online shopping holiday of the year — most retailers are riding a wave of early promotions and eagerly anticipating a healthy 3.6%-4% sales bump expected during the season. Generally, retailers tend to wait out the holidays in hopes that increased sales will push off the need to file for bankruptcy.
But as bankrupt Toys R Us demonstrated mid-September, the holidays can be a volatile period if suppliers fear the retailer is in extreme financial danger — and other retailers simply may not have the cash to get them through the season. In the case of Toys R Us, vendors reportedly scaled back shipments and demanded better terms ahead of the holidays. Following its bankruptcy filing, the toy company has assured customers that it has the full backing of its suppliers and it has since been heavily promoting Black Friday deals and digital experiences that it hopes will breathe new life into the financial distraught company.
In the case of Styles For Less, the exact reason for its bankruptcy is still unclear. Winthrop told Reuters last week that the company plans to reorganize its debt and that it has already begun closing stores. According to the Reuters report, the family that founded Styles For Less ran a similar apparel chain called Clothestime Inc, which filed for bankruptcy in the 1990s.
The teen apparel retailer joins a growing list of retailers that have filed for bankruptcy this year, which includes at least 20 high-profile retailers, many of which are mall-based teen chains. Papaya Clothing, Rue 21, Vanity, Wet Seal and The Limited have all either reorganized under bankruptcy protection or shuttered their operations. As logoed-T-shirts and mall hangouts fell out of fashion, these chains failed to differentiate from similarly struggling rivals — Abercrombie & Fitch, Hollister and Aeropostale — and turnarounds have been tough.
Some of these retailers have told loyal customers they’ll be back as e-commerce businesses, and The Limited and Wet Seal have made good on those promises, but it's clear that if these businesses plan to make a comeback, they'll need a fresh brand identity that connects with the new shopping habits of Gen Z.