United Retail Group Inc, which operates 433 Avenue stores that sell plus-size women?s apparel, on Wednesday filed for bankruptcy protection and said it plans to be sold after being burdened by falling sales and expensive store leases.
United Retail Group Inc, which operates 433 Avenue stores that sell plus-size women?s apparel, on Wednesday filed for bankruptcy protection and said it plans to be sold after being burdened by falling sales and expensive store leases.
URG filed a voluntary bankruptcy petition in U.S. Bankruptcy Court for the Southern District of New York. The petition listed liabilities of $67.3 million and assets of $117.2 million. URG is hoping to use the bankruptcy process to reduce the footprint of the Avenue chain to about 300 stores from the current level of 433. United Retail Group is owned by PPR?s Redcat USA division.
The Rochelle Park, New Jersey-based company said the private equity firm Versa Capital Management LLC has agreed to buy inventory, an Ohio distribution facility and leases for at least 300 stores, subject to higher bids in the Chapter 11 process.
United Retail said it has begun closing 14 stores, and has identified 100 ?chronically underperforming? stores where it hopes to get out of or renegotiate its leases.
In a court filing, United Retail Chief Executive Dawn Robertson, a former president of Gap Inc?s Old Navy unit, said ?Avenue?s current cash needs are significant and liquidity continues to be strained.? She said Redcats USA Inc, a unit of Paris-based retail conglomerate PPR SA that bought Avenue in 2007 for $199 million, has concluded that Avenue is ?not core? to its business of selling plus-size apparel online.
Robertson said sales fell 4 percent last year to $300.6 million, and losses quadrupled to $28.1 million as measured by earnings before interest, taxes, depreciation and amortization (EBITDA).
Spun off by Limited Brands Inc in 1989, United Retail sells apparel for women sizes 14 and up. It operates 433 Avenue stores in 37 states, and employs more than 4,400 people.
Versa is based in Philadelphia, and also has investments in such companies as clothing retailer Bob?s Stores, parking lot operator Central Parking System, and Polartec fabrics.
United Retail said it has arranged $40 million of financing from Wells Fargo & Co to keep operating while in bankruptcy.
The company and five affiliates filed for protection from creditors with the U.S. bankruptcy court in Manhattan, reporting assets of $117.2 million and liabilities of $67.3 million.
It said AlixPartners is providing restructuring advice, Peter J. Solomon Co financial advice, and Kirkland & Ellis legal advice. It said Versa?s law firm is Sullivan & Cromwell.
The case is In re: United Retail Group Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-10405.
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Source: http://fashionsnoopsnewsletter.com/news/?p=7796
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