Aeropostale, one-time mall king, files for bankruptcy
Pop the collar on your polo shirt to half mast.
Aeropostale, once the vibrant epicenter of the U.S. mall scene, is seeking Chapter 11 bankruptcy protection and closing 20 percent of its stores in North America.
The New York company said Wednesday that it is closing 113 of its 739 U.S. stores and all 41 locations in Canada. Going-out-of-business sales at those U.S. stores will begin this weekend.
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A full list of all the stores shutting down can be found here.
Aeropostale expects to emerge from bankruptcy protection within six months as a smaller company after renegotiating contracts and resolving an ongoing dispute with the investment firm Sycamore Partners, a major shareholder that pushed through changes in company leadership.
In the filing, CEO Julian Geiger lashed out at Sycamore, which he accused of hampering the company's turnaround plans.
"The ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans," he said in a company release. "As a result, we have chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today's retail environment."
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Almost every teen retailer has suffered under a vastly altered consumer landscape that took root during the recession. Fast fashion" outfits like H&M and Forever 21, with more inexpensive clothes, have emerged in recent years to take a growing market share from Aeropostale, Abercrombie & Fitch and American Eagle Outfitters, stores that not so long ago dominated the retail sector.
Once worth almost $2.6 billion, Aeropostale's market capitalization has fallen to about $2 million.
The company's shares traded for more than $30 six years ago, when annual sales exceeded $2 billion. Two weeks ago, it was delisted from the New York Stock Exchange with shares having failed to break the $1 barrier since last year. Shares on Wednesday were trading over the counter for less than 3 cents.
The company early this year said that it would cut expenses by $35 million to $40 million annually and trimmed its corporate staff by 13 percent, about 100 jobs.
Aeropostale has secured a commitment for $160 million in debtor-in-possession financing from Crystal Financial LLC, which will allow it to continue operations. It also filed a series of motions that would allow it to pay employees, as well as honor customer gift cards and pay suppliers, if approved by the court.
Additional reporting contributed by Mashable.
Seth Fiegerman was a Senior Business Reporter at Mashable, where he covered startups, marketing and the latest consumer tech trends. He joined Mashable in August 2012 and is based in New York.Before joining Mashable, Seth covered all things Apple as a reporter at Silicon Alley Insider, the tech section of Business Insider. He has also worked as a staff writer at TheStreet.com and as an editor at Playboy Magazine. His work has appeared in Newsweek, NPR, Kiplinger, Portfolio and The Huffington Post.Seth received his Bachelor of Arts from New York University, where he majored in journalism and philosophy.In his spare time, Seth enjoys bike riding around Brooklyn and writing really bad folk songs.
