RTW Retailwinds Inc. is bankrupt.
The New York & Co. parent today filed for Chapter 11 protection in United States Bankruptcy Court for New Jersey. It listed estimated liabilities of between $100 million and $500 million — the same range as its estimated assets.
Going forward, RTW Retailwinds says it plans to close “a significant portion, if not all” of its fleet of 387 brick-and-mortar units. The retailer has launched a store closing and liquidation process and plans to continue to operate business “in the ordinary course” in the near term. It has opened 92% of its stores after two months of closures induced by the coronavirus pandemic. In addition, the apparel and accessories purveyor said it is continuing to explore strategic alternatives, including the potential sale of its e-commerce business.
In a statement, RTW Retailwinds CEO and CFO Sheamus Toal said: “The combined effects of a challenging retail environment coupled with the impact of the coronavirus pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future.”
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“As a result, we believe that a restructuring of our liabilities and a potential sale of the business or portions of the business is the best path forward to unlock value,” Toal continued.
While its struggles have mounted amid the current health crisis, RTW Retailwinds’ problems predate COVID-19. For the 2019 fiscal year, the retailer reported a 7.4% decline in revenues to $827 million. Profits fell from $4.2 million ($0.06 per share) in the prior year to a loss of $61.6 million, or 96 cents per share. Comparable store sales were down 5.4%.
Prior to pulling the trigger on its Chapter 11 petition, RTW Retailwinds wrote in a mid-June filing with the Securities and Exchange Commission that the coronavirus pandemic had materially adversely impacted its cash flow. It raised “substantial doubt” about its ability to continue as a going concern. The company had also entered forbearance last week after reaching an agreement with lender Wells Fargo. It said it plans to pay the remaining owed balance of about $12.7 million by Aug. 31.
Since May, a growing list of traditional retailers — such as JCPenney, J.Crew and Neiman Marcus — have filed for Chapter 11 protection as the coronavirus exacerbates existing challenges. What’s more, several other companies appear to be on the brink of falling into bankruptcy as well, among them Francesca’s, Men’s Warehouse parent Tailored Brands and Ann Taylor owner Ascena.
