Luxury Department Store Lord & Taylor Files for Bankruptcy
Chain’s owner, the fashion rental service start-up Le Tote, also files
Luxury department store chain Lord & Taylor, an industry pioneer dating back nearly 200 years, filed for bankruptcy along with its owner, the venture-backed fashion-rental subscription service Le Tote Inc.
Sunday’s chapter 11 filings in the U.S. Bankruptcy Court in Richmond, Va. are the latest indications of the Covid-19 pandemic’s ruinous effect on storied American retailers, coming less than a year after Le Tote agreed to buy Lord & Taylor from Hudson’s Bay Co., the parent of Saks Fifth Avenue.
Lord & Taylor temporarily closed its 38 bricks-and-mortar locations in March but has continued to operate through online channels as restrictions on nonessential shopping went into effect during the coronavirus pandemic.
In court papers, the company said it would conduct going-out-of-business sales at the Lord & Taylor stores, anticipating a liquidation of the bricks-and-mortar footprint.
The most-profitable locations will continue to be marketed in the hopes of generating interest, Chief Restructuring Officer Ed Kremer said in a declaration filed in court.
The company is considered the oldest U.S. department store and was the first to install an elevator, open a branch location and hire a woman CEO—Dorothy Shaver, who was instrumental in making it a beacon for American designers in the ’40s and ’50s. The chain traces its origins back to 1826 when Samuel Lord and George Washington Taylor founded a dry-goods store on New York City’s Lower East Side.
Founded in 2012, Le Tote rents women’s clothing and accessories for a flat monthly fee. Backers of the San Francisco company include venture-capital firms Andreessen Horowitz, Y Combinator and Google Ventures.
As Americans’ spending on apparel has plunged, thousands of retailers have been forced to shut their doors, some for good. Since March, a number of major clothing retailers have been pushed into bankruptcy, including Brooks Brothers Group Inc., J.C. Penney Co., Neiman Marcus Group Ltd. and J.Crew Group Inc.
But department store chains like Lord & Taylor, J.C. Penney and Neiman Marcus were already retrenching before the pandemic, struggling with falling sales as shoppers buy more online and shift their preferences to small specialty stores. More than two dozen public and large private retailers in the U.S. have filed for bankruptcy so far in 2020, more than in all of last year.
Lord & Taylor’s troubles started in 1986 when its parent company was acquired by May Co. The new owner added lower-priced merchandise, ran frequent sales and kept a tight lid on investments, undercutting Lord & Taylor’s upscale image.
Hudson’s Bay sold the retailer’s flagship New York City store on Fifth Avenue for $850 million to WeWork Cos. A few years later Le Tote bought the whole company for roughly $100 million.
The business generated $253.5 million in revenue last year and entered the bankruptcy with 651 employees and $137.9 million in debt.
Lord & Taylor’s bankruptcy advisers include law firm Kirkland & Ellis LLP, financial adviser Berkeley Research Group LLC and investment bank Nfluence Partners.
The case number is 20-33332.