It used to be the case that the popular place for teens in Louisville to hang out was the mall. However, some stores in mall these days are finding that they are no longer teenage hot spots, leading some malls to file for bankruptcy.
Clothing retailer, Wet Seal, has filed for bankruptcy for the second time in two years. But, this time around, the chain, geared to young women, aims to sell itself. This is instead of undergoing further proceedings in court. In Wet Seal's first bankruptcy, it closed 338 stores, but kept 171 locations operational.
Wet Seal's predicament reflects a larger issue: patrons simply are not shopping at malls in the numbers they had in the past. Teenagers, in particular, are more apt these days to shop at fast-fashion retailers, such as H&M, instead of other mid-priced retailers.
For example, of all of Gap, Inc.'s, brands, Old Navy is the only one that is currently doing well. Another retailer, American Apparel, also has two bankruptcy filings under its belt. A third retailer, The Limited, has closed down its mall locations and is now focusing purely on online shopping. And, a fourth retailer, Aeropostale, has also filed for bankruptcy and now is running under new ownership.
It remains to be seen if Wet Seal will be able to sell its franchise in this second bankruptcy. But, filing for business bankruptcy is not a desperate measure. It is the financially responsible thing for a business to do, if it is in over its head in debt. It allows the business to restructure itself in a way that hopefully makes it more profitable. Therefore, business bankruptcy should not be seen as a last resort, but as a business savvy move.
Source: Consumerist, "Wet Seal Considering Second Bankruptcy In Two Years," Laura Northrup, Jan. 13, 2017