Aeropostale is closing 133 stores in the U.S. and 41 locations in Canada before the end of 2016 as part of a Chapter 11 bankruptcy petition filed on Wednesday.
According to a court document, 117 stores failed to turn a profit and the company lost nearly $17 million in 2015. The remaining closing stores “experienced poor or negative sales” and generated no profit.
Aeropostale’s most recent earnings report indicated sales plummeted 16 percent for the first quarter of 2016. The chain retailer listed assets between $100 million and $500 million with liabilities between $100 million and $500 million.
The bankruptcy petition will help Aeropostale restructure and adjust its store footprint. The company will also be able to eliminate or renegotiate some contracts, resolve legal issues with supplier MGF Sourcing US, and ultimately get back into profit.
“As a result, we have chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today’s retail environment,” said Julian Geiger, Chief Executive Officer. “We appreciate the loyalty and support of our customers, employees and business partners as we complete this process.”
Sycamore Partners, an affiliate of MGF, assisted failing Aeropostale in 2014 with an injection of $150 million. At one time, Sycamore also owned eight percent of the teen apparel retailer.
Aeropostale is also reviewing location leases to ensure they are in line with others in the same market.
As part of the bankruptcy protect petition, Crystal Financial LLC will lend Aeropostale $160 million to keep the company in operation during the process. Pending court approval, the company will continue to pay employees, honor gift cards, fund its international operations, and keep supplier functions intact.
Over the next six to eight weeks, the company will liquidate the stores and expects to bring in about $21 million in revenue. Sales in the U.S will begin on May 7, while in the Canada they will start on May 9.
Many on Wall Street predicted Aeropostale’s bankruptcy. Sales for the company have been on the decline for quite some time, and back in March, the company announced it was considering different “strategic alternatives.”
In January, the company announced job layoffs and a cost-cutting program expected to provide $40 million in savings. Without much success, Aeropostale also attempted a merchandise overhaul designed to be more classic and less trendy than competitors.
Many Aeropostale stores are located in smaller, regional malls that have been hurting due to the rise in online shopping. Meanwhile, many retailers who were extremely popular with teens and young adults in the 1990s have had trouble catching up with the fashion trends of 2016.
As more and more customers open their wallets to online retailers and trendy companies like H&M and Forever 21, other retailers like American Apparel, Quiksilver, and Wet Seal have also filed bankruptcy in the past year. These stores have also closed most, if not all, of their locations.
Started in the 1980s by R.H. Macy’s & Co., Aeropostale started trading on the New York Stock Exchange in 2002. However, as previously reported by the Inquisitr, their stock was delisted just last month after the share price dropped below one dollar.
Aeropostale’s core business is casual apparel and accessories geared toward younger men and women. In addition to name-brand clothing, the company designs, sources, markets, and sells its own proprietary attire. The retailer also owns and operates GoJane.com, a fashion footwear and clothes website exclusively for women.
A complete list of the Aeropostale 2016 store closings is available here.
Currently, Aeropostale has 739 stores in the U.S. and Puerto Rico, 41 in Canada, and 25 P.S. from Aeropostale locations in 12 states. Overseas, the company licenses 322 stores. The bankruptcy process is expected to be completed within the next six months.
[Photo by George Pimentel/Getty Images for Aeropostale]