The company, which posted losses in five of the past six quarters, listed total debt of $131 million in Chapter 11 papers filed Monday in Nebraska federal court. Gordmans said in a statement that it has an agreement with Tiger Capital Group and Great American Group “for the sale in liquidation of the inventory and other assets of Gordmans’ retail stores and distribution centers,” subject to court approval or a better offer.
For now, the chain will operate “as usual without interruption,” Chief Executive Officer Andy Hall said in the statement.
Omaha, Nebraska-based Gordmans, which operates over 100 stores in 22 states and employs about 5,100 people, is the latest victim in a retail industry suffering from sluggish mall traffic and a move by shoppers to the internet.
The shift has been especially rough on department stores, including regional chains like Gordmans that once enjoyed strong customer loyalty, but even national concerns like Sears Holdings Corp. and Macy’s Inc. have had to close hundreds of locations to cope with the slump.
Clothing Shop
Gordmans traces its roots to 1915, when Russian immigrant Sam Richman opened a clothing shop in Omaha. He later teamed up with a former Bloomingdale’s executive, Dan Gordman, whose car broke down in Omaha en route to California. Gordman met Richman’s daughter while he was waiting for his car to be repaired and decided to stick around. The two later married.
Private equity firm Sun Capital Partners bought the business in 2008 and took it public two years later. Funds managed by Sun Capital hold about 49.6 percent of Gordmans’ equity, according to a court filing.
Growth slowed in 2014, and losses began to mount. Same-store sales fell more than 9 percent in the most recently reported quarter. The company announced job cuts in January, citing the “sluggish retail environment.”
“Like many other apparel and retail companies, the debtors have fallen victim in recent months to adverse macro-economic trends, especially a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics, and expensive leases,” Chief Financial Officer James B. Brown said in court papers.
Around the beginning of March, as the company’s fortunes continued to wane, vendors began to refuse to ship new inventory, Brown said. After entertaining various offers, the company concluded that its best recourse was the liquidation deal with Tiger and Great American.
The case is In re Gordmans Stores Inc., 17-80304, U.S. Bankruptcy Court, District of Nebraska (Omaha).
by Andrew Dunn Source: Bloomberg, March 2017