For the second time in five years, David’s Bridal has filed for Chapter 11 bankruptcy protection and now says it may be forced to wind down its operations and liquidate if it doesn’t find a buyer.
The Conshocken, Pennsylvania-based firm, the nation’s largest bridal-apparel chain, said it’s being jilted by shoppers as fewer Americans get married annually and brides are looking for more casual dresses for their big day, even finding them in thrift shops. The retailer’s sales have suffered as a result.
So David’s Bridal went to U.S. Bankruptcy Court in New Jersey on Monday, just days after filing notice with state labor officials that it planned to lay off just over 9,000 employees. The roughly 70-year-old company said it expects to file a recognition proceeding in Canada, and a subsidiary of David’s Bridal expects to commence an administration proceeding for its business in the United Kingdom.
David’s Bridal has become the latest retailer to file for bankruptcy this year as companies continue to reel from the repercussions of the pandemic and feel the pinch of higher interest rates and tight credit. The others include Woodcliff Lake, New Jersey-based Party City, Dallas-based Corner Bakery, Dallas-based Tuesday Morning and Gwynn Oak, Maryland-based Shoe City. And Union, New Jersey-based Bed Bath & Beyond has been struggling to avoid going to bankruptcy court.
In a statement Monday, David’s Bridal said it plans for its stores to remain open and to continue operating as normal for now, including fulfilling all customer orders without disruption or delay. It filed for voluntary Chapter 11 relief in New Jersey. But CEO James Marcum offered a gloomy outlook for the retailer in one of the bankruptcy documents, saying it’s working with Gordon Brothers Retail Partners on a potential liquidation if necessary.
David’s Bridal — which sells wedding gowns, dresses for bridal parties and apparel and accessories for formal events — has 294 stores, including 278 stores in 49 U.S. states, 12 stores in Canada, and four stores in the United Kingdom. The retailer also provides support to eight franchised stores in Mexico. David’s Bridal said it leases all of its stores, except for one in New Jersey. It has two distribution centers, one in Conshohocken and the other in Bristol, Pennsylvania.
In a court filing, the company said about 25% of brides in the United States wear a David’s Bridal gown at their wedding and about 87% of brides visit David’s Bridal’s website at least once during their wedding planning process.
Before the Chapter 11 filing, David’s Bridal said it was exploring a a wide range of strategic alternatives, including a marketing and sale process. In light of its liquidity constraints, the retailer said “it was unable to finalize its marketing and sale process out of court and intends to continue exploring a sale of all or some of its assets.”
Along with these efforts, David’s Bridal said it “is also strategically managing inventory and evaluating its physical footprint to maximize value and the prospect of a successful going concern transaction.”
The retailer said it has identified various “operational efficiency initiatives to support a new, scaled down enterprise, including a reduction in its store fleet, corporate and store workforce, and corporate expenses.” But it will need immediate access to the necessary liquidity to implement that plan and to continue to search for a buyer, according to Marcum. If David’s Bridal efforts fail, it will turn to an orderly liquidation of its remaining assets, he said.
The retailer first filed for bankruptcy protection in November 2018, and emerged from it two months later, deleveraging its balance sheet by $434 million. A new senior management team took over and made changes.
“Notwithstanding these efforts, the company is suffering under severe liquidity constraints brought on by a confluence of adverse macroeconomic trends and industry specific headwinds, including the lasting impact of COVID-19 on the wedding industry,” Marcum said in a court filing.
Sales have been hurt, as well, because of COVID and changes in the retail industry, according to Marcum.
“Finally, shifts in consumer behaviors have contributed to the elongation of wedding planning cycles and an overall casualization in wedding events, thereby affecting the demand for more traditional wedding gowns and formal attire, all of which have further reduced the debtors’ revenue,” he said.
And fewer people are getting married, according to Marcum. The marriage rate in 2022 remained low, with only 1.9 million weddings occurring last year as compared to the more than 2.2 million weddings that occurred annually in the years leading up to the pandemic, according to Marcum.
The current environment has also “contributed to David’s Bridal facing escalating competition from traditional online retailers and other pure-play clothing retailers, as an increasing number of brides are opting for less traditional wedding attire, including thrift wedding dresses,” he said.
Last week David’s Bridal filed notices in several states, including Pennsylvania, saying it was laying off a total of 9,236 workers around the country. It has 10,000 workers according to bankruptcy papers. The job cuts will take place from now through August.
“Over the last several years, we have taken meaningful strides in our transformation to fulfill the needs of the brides of today and tomorrow,” Marcum said in a statement. “We have successfully modernized our marketing and customer interaction processes and driven our retail service levels to best in class. Nonetheless, our business continues to be challenged by the post-COVID environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward. We are determined to stay focused on our future, because we believe we have an important role in ensuring that every bride, no matter her budget, can have her perfect dress.”
In an email on Monday, a company spokeswoman said, “We continue to believe that there is value in our brands and potential purchasers remain interested in our business and in exploring transactions.”
Kirkland & Ellis and Cole Schotz are serving as legal counsel. Houlihan Lokey Capital is serving as investment banker. BRG is serving as financial and restructuring adviser. Osler, Hoskin & Harcourt is serving as Canadian legal counsel. C Street Advisory Group is serving as strategic communications advise. Omni Agent Solutions is serving as claims and noticing agent to the company. The retailer has retained Gordon Brothers to assist with inventory sales.