8 legacy retailers that wound up in bankruptcy this year
These companies made it through world wars, social upheaval and depressions, but met their undoing in a year defined by a pandemic.
Retrieved from Stein Mart on October 14, 2020
It takes a lot of perseverance and adaptability to weather the kinds of cultural, economic and technological changes that happen in 50 years, much less a century — or two. Retailers like Target (founding owner Dayton's department stores launched in 1902) and Macy's (established in New York in 1858) had to get past depressions, world wars, social upheaval, changing norms, pandemics and sometimes their own bankruptcy in order to be in business today. For several legacy retailers around their age or even older, however, 2020 was the breaking point. This year has already set records for the number of retail bankruptcies — 27 by Retail Dive's count at press time — with yet more possible. Some of these brands will survive their latest challenge, and emerge from the bankruptcy process ready to write their post-pandemic chapter. For the others, it will at long last mean "goodbye." 1. Brooks Brothers, founded 1818 (202 years) Brooks Brothers calls itself the oldest apparel retailer in the U.S. Its first store debuted the same year the White House reopened after burning down in the War of 1812. For nearly two centuries the retailer thrived in a society that held on to fairly strict dress codes for men for work, worship and special occasions. With the white-collar workplace growing increasingly less formal, that has changed, to the point where last year even venerable financial firm Goldman Sachs opted to dress down. Brooks Brothers did work to keep up with the times — giving Ralph Lauren his start, tapping Zac Posen as its creative director for women's and leveraging its store network for fulfillment well before the pandemic — but sales continued to ebb. Before its Chapter 11 filing this year, the brand was briefly owned by U.K. retail giant Marks & Spencer, then bought by Retail Brand Alliance led by Claudio Del Vecchio. The label is now in the hands of mall owner Simon and brand management firm Authentic Brands Group, which snapped it up at its bankruptcy auction for $325 million.
2. Lord & Taylor, founded 1826 (194 years) Lord & Taylor is the oldest department store in the U.S. — or make that was. The once innovative retailer weathered all sorts of challenges in nearly two centuries, expanding from a fashion hub in New York to a chic suburban destination for stylish middle-income women across the U.S. Arguably what it couldn't get beyond was the lack of attention from parent Hudson's Bay Co., which sold off key properties and finally the retailer itself, to apparel rental site Le Tote. All the while HBC lavished $250 million on a renovation of its other New York-based department store, Saks Fifth Avenue. The Le Tote tie-up was strange, but did seem to be the first time in a while that Lord & Taylor had an owner interested in its future. Alas, the pandemic cut short whatever plans Le Tote had in store, beyond the early signs of integration in some locations. Without a buyer and now in bankruptcy, Lord & Taylor is in the midst of liquidating entirely. Its New York City flagship on Fifth Avenue, once famous for its holiday windows, is being converted into an East Coast tech office for Amazon. Get retail news like this in your inbox daily. Subscribe to Retail Dive: Email: Sign up
3. Modell's Sporting Goods, founded 1889 (131 years) Morris Modell opened his first store on Cortlandt Street in lower Manhattan in 1889, and the retailer stayed in the family for four generations, eventually expanding to more than 150 locations on the East Coast. After filing for bankruptcy in March, the company has permanently shut all stores and as of press time says it's still unable to take online orders. The company came to depend mightily on local teams doing well in big games in order to move merchandise, a tricky situation for a sector also competing with Amazon. With CEO Mitchell Modell, Morris's great-grandson, at the helm, the company turned to consultants for restructuring advice more than once, but ultimately wasn't able to overcome the troubled market, which also felled rivals Sports Authority and Sport Chalet.
4. Bergdorf Goodman, founded 1899 (121 years) The temporary outdoor cafe at Bergdorf Goodman at 58th and 5th in New York is a sign of hope for the city, where streets remain strikingly empty of tourists, office workers and shoppers as the pandemic continues its disruption. The department store, founded in 1899 by a tailor who was later joined by his apprentice, was acquired in 1972 by Neiman Marcus, which reportedly promised then not to open a competing flagship in the city (a promise later broken, if only fleetingly, when Neiman Marcus closed its Hudson Yards store after barely a year in operation). Bergdorf has never strayed from its luxury focus and maintains a high level of loyalty. Post-bankruptcy, both Neiman and Bergdorf unleashed a wave of layoffs, however, in part to redirect focus to e-commerce.
5. J.C. Penney, founded 1902 (118 years) James Cash Penney built his first dry-goods store in Wyoming in 1902, but there are few retailers whose fate is so closely tied to the rise and fall of the American mall. Anchoring a mall was a boon in the 1960s when it represented progress, economic expansion and prosperity. But it's a very different story today, and Penney has struggled for years to get customers through the door. In the past decade, during an endless turnaround, the company welcomed four CEOs in turn, and even its bankruptcy has been a slow and painful grind. Its deal to sell its operations to developers Simon Property Group and Brookfield Property Partners is seen by some observers as a desperate attempt by those mall owners to salvage downstream leases, rather than a true sign of hope.
6. Neiman Marcus, founded 1907 (113 years) Neiman Marcus opened in 1907 with one store in Dallas, founded by Herbert Marcus and his sister, Carrie Marcus Neiman, and established itself on the forefront of fashion, acquiring New York's Bergdorf Goodman in 1972. The founding family ceded control of the business in the 21st century, and a couple of leveraged buyouts, one in 2005 and the next in 2013, heaped on a massive debt load, eventually nearing its $5 billion or so in annual revenue. This year's bankruptcy filing came as little surprise, but the company exited fairly smoothly in a matter of months. The department store previously shrank its Last Call off-price banner to focus on luxury, which it says it can do even online, thanks to a robust digital effort. It leaves bankruptcy with a smaller footprint, including the closure of its year-old namesake flagship at Hudson Yards, its first in New York. With a pandemic ongoing, the economy in recession and the department store sector in decline, however, its future remains cloudy.
7. Stein Mart, founded 1908 (112 years) Stein Mart was founded in 1908 by Sam Stein and became known as an off-price department store with a mission to provide "the customer with unique quality products at excellent prices." At the start of 2020, Kingswood Capital Management agreed to acquire the Jacksonville, Florida-based retailer and take it private. That came about two years after the company signaled it was exploring "strategic alternatives," following plummeting sales every year since fiscal 2016. But while Stein Mart was moving to improve merchandise, reduce inventory and cut costs, things started to unravel. As COVID-19 hit the U.S. this spring, the takeover was canceled due to "unpredictable economic conditions" and "uncertainty regarding Stein Mart's ability to satisfy the conditions to closing." By mid-July the virus was surging in locations like California, Texas and Florida — home to nearly 40% of its stores. In August the company filed for Chapter 11 with plans to liquidate its stores. As of October, the retailer has closed its e-commerce operations, is selling off store fixtures and is promoting up to 80% off its lowest ticketed prices.
8. J. Crew, founded 1947 (73 years) While the apparel company was known as "Popular Merchandise" at its founding and employed an in-home sales model, it became a catalog mainstay after its name change to J. Crew in 1983. Its high-water mark came in that decade and into the nineties, when "preppy" was not just for country clubs and country day schools. But the 21st century would mark its downfall. J. Crew CEO Mickey Drexler developed Old Navy for Gap when he led that American fashion icon, and in 2004 snapped up Madewell's dormant intellectual property (once a New England workwear manufacturer, itself founded in 1937) to forge a similar growth plan for J. Crew. But too many stores in too many malls, a huge pile of debt, and J. Crew's wild departure in fashion and quality (under creative chief Jenna Lyons) drained profits and tanked sales. The company went in and out of bankruptcy in just a few months this past summer, but faces a long uphill climb amid uncertainty about J. Crew's ability to right itself, and its healthier but smaller brand's capacity to grow. Kaarin Vembar contributed to this story