As readers of this blog may remember, back in December, this blog reported that the once-popular women’s clothing chain, The Limited, was planning to file for bankruptcy. Louisville residents may be interested to hear then that recently, The Limited acted on that plan. It did so by filing for Chapter 11 bankruptcy and closing all of its 250 locations.
The Limited began in 1962 as a single store located in Ohio and incorporated in 1969. At the peak of its business success, the chain had 750 locations. In the 1980’s L Brands opened or acquired other clothing retailers, such as Lane Bryant and Victoria’s Secret, among others. However, the retailer cited a decline in mall patrons, high leases, a lack of sales and a general move towards shopping via the Internet as the reasons behind its decision to file for bankruptcy.
Despite filing for bankruptcy, The Limited’s name may remain. An affiliate of Sycamore Partners, a private equity firm, has entered into an agreement in which it will undergo a “stalking horse” bid for $25.75 million for The Limited’s intellectual property. A stalking horse bid is one that determines what the minimum bid would be in an auction. The Limited aims to hold an auction within a month. In addition, the private equity firm, Sun Capital Partners, Inc., which obtained a majority stake in The Limited and purchased it in 2010, informed its investors that it earned almost twice its initial investment in The Limited of $50 million.
The Limited is not the only retail clothing chain facing financial difficulties. Over the past year, other retail clothing chains, including Aeropostale, Inc., and American Apparel, filed for bankruptcy. Moreover, some department stores, including Macy’s and Sears, plan to close many of their locations in 2017. It remains to be seen whether these businesses will file for Chapter 11 bankruptcy, but if they do, it may be possible for them to enter into a plan for reorganization that allows them to remain operational.
Source: Reuters, “Women’s apparel retailer Limited Stores files for bankruptcy,” Arathy S. Nair & Tom Hals, Jan. 17, 2017