- UPDATE: Women's shoe and fashion company Nine West has filed for Chapter 11 bankruptcy in New York federal court, according to Bloomberg.
- Reuters reported Thursday that the retailer was nearing a bankruptcy deal with creditors that would sell the intellectual property of its flagship brand to Authentic Brands Group. The sale would help pay down some $1.5 billion in debt, and in turn would "increas[e] chances that the company will emerge from a planned bankruptcy." In March, Nine West missed an interest payment on its debt, Reuters reported.
- As part of the plan, creditors would take over Nine West's remaining business, including a denim line sold in mass market retailers, according to Reuters. The news service also reported that some Nine West creditors plan to sue Sycamore Partners — the private equity company that acquired Nine West in a $2.2 billion leveraged buyout of the Jones Group in 2014 — for the sale of Kurt Geiger and Stuart Weitzman, divestitures that in their view "made Nine West insolvent."
Nine West has been teetering on the brink of default for some time now. In January, Debtwire and Bloomberg reported that the company had found an acquirer for some assets and planned to file for bankruptcy in the coming months.
Debtwire in February reported that the company had a signed letter of intent from a potential IP acquirer and had reopened financial negotiations with its creditors, some of whom had gone restricted.
For years the women's fashion retailer and wholesaler has been losing market share amid softening apparel sales and competition from e-commerce players.
In October 2016, the brand got a reprieve from its lenders in order to help it ride out the holidays in preparation for 2017.
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.
In issuing the retailer's C-level credit rating last year, Moody's last year pointed to the company's lackluster financial performance together with a "very high debt and leverage burden" that made for an "unsustainable" capital structure and high chance of default. Moreover, the company's retail operations have been on the downslide for years, as it operates in a "challenged moderate price department store sector which we believe will make revenue growth difficult," Moody's analysts wrote last March.
In 2016, sources told Bloomberg that restructuring firms had approached Nine West with proposals to reduce its debt. In May, the company announced it had retained investment bank Lazard to evaluate a long-term capital structure solution.
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 this year hoped to sell off a portion of its remaining intellectual property to help refinance a loan, Debtwire Associate Editor Reshmi Basu told Retail Dive in an interview earlier this year. "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."
The company has also been eyeing cost cuts, which would include 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.
The sale of Nine West's flagship IP to Authentic Brands would ensure Nine West's brand lives on and also add to Authentic's growing portfolio, which recently brought in the Nautica brand for an undisclosed amount.