Struggling specialty apparel retailer Limited Stores is preparing to file for bankruptcy in the coming weeks and will most likely liquidate its business, Bloomberg reports.
Last month, the retailer hired Guggenheim Partners to explore a sale and said it was entertaining bids, according to The Wall Street Journal.
The company has some $100 million in debt, sources told Debtwire. Private equity firm Sun Capital owns the struggling chain, but private equity firm Cerberus Capital Management is its largest lender, sources told the New York Post last month; that sets up a potential clash of interests as the retailer’s fate unfolds.
News of The Limited Stores’ continued efforts to prepare for restructuring, a sale or ultimately liquidation comes at a time when executives are missing from its CEO and CFO posts. John Buell, elevated from his CFO role to become interim CEO when CEO Diane Ellis left to become president of women’s apparel brand Chico’s in October, also left the company last week. Buell abandoned ship to become the senior vice president and CFO of fashion and home decor brand Altar’d State
At the time, Limited Stores said without a CEO or a CFO its “existing executive team is working collaboratively on management of the company’s operations, and senior financial team personnel are continuing to oversee finances.”
The company also recently notified the Ohio Department of Job and Family Services that it may lay off as many as all 248 employees, including its entire headquarters staff, and close down that Columbus, OH-area office as it struggles with plummeting sales.
The retailer is a shadow of its heyday as a successful speciality mall retailer. Former parent L Brands (owner of Victoria’s Secret and Bath & Body Works) sold a 75% stake in The Limited to private equity firm Sun Capital in 2007; three years later, Sun acquired the remaining 25% stake. But some malls, themselves suffering from falling foot traffic as e-commerce sales rise, aren’t always especially helpful to stores like The Limited, which has 243 stores across the country.
Limited Stores has hired RAS Management Advisors to advise on strategic and financial alternatives, including a potential restructuring, sources familiar with the matter told Debtwire, and the company has also hired Kirkland & Ellis as its legal adviser, according to Bloomberg. The Limited, Guggenheim Partners and RAS Management didn’t respond to requests for comment.
John Buell, named interim CEO of struggling women’s apparel retailer The Limited in October, has left the company to become the senior vice president and CFO of fashion and home decor brand Altar’d State, the Columbus Dispatch reports.
Buell, a 13-year veteran of The Limited, was elevated from his CFO position to the top spot after CEO Diane Ellis left to become president of women’s apparel brand Chico’s. His departure likely signals the end of The Limited, according to Lee Peterson of retail consultancy WD Partners (a Limited veteran himself): “The party’s over,” he told the Dispatch. “[Buell’s exit was] so quick — what does that tell you? But you can’t blame him. After the layoff announcements, I’m sure a lot of people at the headquarters are thinking about doing the same thing — and I’m sure people in the stores have their resumes out there, too.”
Limited Stores said in a statement that, without a CEO or a CFO, its “existing executive team is working collaboratively on management of the company’s operations, and senior financial team personnel are continuing to oversee finances.”
Earlier this month The Limited said it might shutter its headquarters and close all stores permanently amid plummeting sales and crushing debt. The company had previously hired Guggenheim Partners as financial adviser to explore a possible sale or restructuring, with rival retailers or private equity firms as potential suitors.
The New Albany-based retailer, which has 243 stores across the country, was formerly owned by L Brands (owner of Victoria’s Secret and Bath & Body Works), which sold a 75% stake in The Limited to private equity firm Sun Capital in 2007. Sun acquired the remaining stake three years later.
While Sun Capital touts The Limited as a place to buy “upscale” women’s clothing, the retailer is operating as a shadow of its former self, beset by falling mall traffic and styles that can also be found at rivals like Loft and at department stores. The Limited’s appeal may be further muddled by its recent “Backroom” off-price effort.
As online sales of apparel continue to rise, pressure on malls to revive or shutter is increasing, vexing specialty retailers like The Limited that are so dependent on their customer appeal. The U.S. currently has about 1,100 enclosed malls, but Jan Rogers Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said earlier this year that number should be closer to 700.