Another large retailer has decided to seek protection from its creditors by filing a Chapter 11 bankruptcy petition. David's Bridal, the largest seller of wedding clothing and accessories in the United States, with stores in Yonkers, Long Island and 300 units elsewhere, filed a Chapter 11 petition on November 18. The company is hoping to obtain sufficient financing to enable it to emerge from bankruptcy with greatly reduced debt and enough cash to revive its operations.
David's began as a small bridal shop in Florida in 1950. It gained a reputation for selling reasonably priced wedding dresses and related apparel and grew steadily. In 2012, the company was purchased by a private equity company in a $1.05 billion leveraged buyout. The wedding apparel industry has seen rapid changes over the last few years. For example, the average amount spent a wedding gown grew from $1,211 in 2012 to $1,564 in 2016. New rivals emerged, with lower prices and fewer fancy and expensive frills. Another retailer offers off-the-rack dresses that can be tried on by customers without making an appointment. David's has had difficulty in competing with shrinking marriage rates, intense price competition and a shift in customer tastes away from elaborate and expensive fitting.
According to information provided by the company when it filed its bankruptcy petition, David's has already completed negotiations for $60 million in new financing and a recommitment by creditors to a $125 million revolving line of credit. The company has promised to fulfill all pending orders and that it will complete its bankruptcy reorganization in January of 2019.
The bankruptcies of David's, Sears and Toys 'R' Us demonstrate how even large, apparently well-off retailers can encounter problems if they cannot adapt to rapidly changing markets. Even small companies can face similar difficulties and may need to seek bankruptcy protection.