Women's apparel retailer Limited Stores files for bankruptcy

Jan 17 (Reuters) - U.S. women's apparel chain The Limited filed for Chapter 11 bankruptcy protection on Tuesday after closing all 250 stores, the latest brick-and-mortar retailer to fall victim to changing tastes and online competitors.

The retailer that began as a single store more than 50 years ago blamed declining mall traffic, falling sales, expensive leases and the shift toward online shopping.

Retailers filing for bankruptcy in the past year include Aeropostale Inc, Pacific Sunwear of California Inc , Sports Authority, Vestis Retail Group and American Apparel.

In addition, department store chains such as Sears Holdings Corp and Macy's Inc are planning on closing scores of locations this year.

At the same time, internet retailer Amazon.com Inc said this month it plans to add 100,000 jobs, expanding its workforce by more than 50 percent, to speed deliveries.

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9 retailers that bombed in 2016

J. Crew

The apparel retailer has had a difficult few years

J. Crew announced in November that sales at stores open at least a year dropped 8%, following a decrease of 11% in the same period last year.

Now, the company is attempting to change things up. In November, the retailer axed its popular bridal line. A month earlier, J. Crew launched an athleisure line with New Balance — a collection that Business Insider felt failed to live up to competitors' standards. 

Sears

Sears' sales continued to plunge in 2016. In the most recent quarter, revenue fell 13% to $5 billion, with losses widening to $748 million from $454 million in the third quarter last year.

The retailer is closing hundreds of stores, with more than 170 Sears and Kmart locations shuttering this year. 

And, things are only getting worse — many analysts say 2017 is likely the year that Sears goes bankrupt.

Macy's

In August, Macy's revealed plans to close down 100 stores in early 2017 as the retailer looks for a solution to slowing sales and the growth of online competitors. 

In November, the retailer reported that net income for the third quarter fell by 87% to $15 million, following a 46% decline over the same period last year. Same-store sales at stores open at least a year fell 3.3%.

"These figures show a company grappling with what looks like terminal decline," Neil Saunders, CEO of the consulting firm Conlumino, wrote in a note to clients.

Hugo Boss

Huge Boss simply isn't cool any more. 

In a UBS report released in Decemberonly 20% of people surveyed said that Hugo Boss was a cool and fashionable brand, compared to nearly 40% a year ago.

Being off-trend is seriously impacting sales. In November, the company adjusted its sales prediction for 2016, saying sales could decline up to 3% in the year. 

Coach

The handbag maker stopped selling merch at more than 250 department stores in 2016 in an effort to regain its premium, luxury status.

However, the move hasn't paid off yet — in November, when reporting the company's the most recent quarter, Coach said it had its slowest growth in four quarters.

Nasty Gal

A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November. 

"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.

The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.

It looks like Nasty Gal could get a fresh start in 2017. On Wednesday, British online fast-fashion retailer Boohoo.com announced it was bidding $20 million for Nasty Gal's brand and customer list. 

Lands' End

In December, Lands' End reported a 14.3% drop in same-store sales in the third quarter, with a 49% drop in apparel sales. That marked the ninth consecutive quarter of declining sales for the company. 

To make matters worse, Lands' End has also been dealing with problems in its executive suite.

In September, Federica Marchionni left her position as CEO. According to the Wall Street Journal, her departure was triggered by employees' disagreements with Marchionni's more high-fashion approach to the brand as well as the limited time she spent in the office — just one week every month. 

Aeropostale

As teens' interest in the brand waned, Aeropostale filed for Chapter 11 bankruptcy in May.

After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada. 

"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."

Kate Spade

Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price. 

Now, the company is reportedly working with investment banks on a possible sale, the Wall Street Journal reported Wednesday.

The news comes six weeks after New York-based hedge fund Caerus Investors sent a letter to Kate Spade pushing the retailer's board to consider a sale.

"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.

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While The Limited's stores are closing, its name may live on.

An affiliate of private equity firm Sycamore Partners agreed to provide a $25.75 million "stalking horse" bid for the company's intellectual property, which includes its trademarks, website address and social media accounts.

The stalking horse sets a minimum bid for an asset in an auction, which The Limited hopes to hold within 30 days.

Sycamore acquired the intellectual property of Coldwater Creek after the women's apparel chain filed for bankruptcy. While the chain's stores closed in 2014, Coldwater Creek continues to sell through its website.

The Limited grew from a single store in Upper Arlington, Ohio, in 1963 and went public in 1969 as The Limited Inc, and later L Brands. The chain grew to 750 stores at its peak.

Beginning in the 1980s, L Brands launched or acquired Limited Express, Victoria's Secret, Lane Bryant, Lerner New York, Henri Bendel, Limited Too, Abercrombie & Fitch, Express Men and Cacique.

In 2007, Sun Capital Partners Inc, a private equity firm, acquired a majority stake in Limited Stores and bought the rest in 2010.

Despite closing The Limited stores, Sun Capital told its investors that it had earned nearly double its initial $50 million investment in the retailer.

The asset sales are subject to approval from the U.S. Bankruptcy Court in Wilmington, Delaware, where the Limited Stores LLC, the chain's parent, filed for Chapter 11.

Klehr Harrison Harvey Branzburg LLP is The Limited's legal adviser, while RAS Management Advisors LLC is its restructuring adviser. Guggenheim Securities LLC is the investment banker for the restructuring. (Reporting by Arathy S Nair in Bengaluru; and Tom Hals in Wilmington, Del.; Editing by Sriraj Kalluvila and Matthew Lewis)


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