Not again! Loehmann's filed for Chapter 11 protection yesterday…it's second time in 11 years. According to today's NY Post, the off-price clothing chain is struggling under a crushing mound of debt and against a cadre of new competitors, from Nordstrom Rack to Gilt Groupe.
The bankruptcy is the latest casualty for Loehmann's owner Istithmar. In case you don't remember, Istithmar is the Dubai-based firm whose former CEO David Jackson who became notorious for overpaying in 2006 and 2007 for ill-fated trophy investments like Barneys and the Union Square W Hotel.
Just as it did with Barneys, Istithmar's strategy of opening too many stores in bad locations has crippled the company. Istithmar is nevertheless still angling to keep control of Loehmann's and trying to sell many of those stores. The firm recently turned it's back on a "low-ball" offer for the chain from off-price rival Syms which scooped Filene's Basement out of bankruptcy last year.
Under a restructuring plan revealed yesterday, Istithmar will continue to operate the retailer as it shells out $25 million for a 49% equity stake in the reorganized company.
TJ Maxx "has become what Loehmann's was 25 years ago," says Mike Tesler of the consulting firm Retail Concepts. "Loehmann's used to attract the upmarket customer and they no longer are. Those savvy customers are now going to TJ Maxx and Gilt Groupe."
Source: NY Post
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