Retailer Bebe avoids bankruptcy with landlord deals -sources

bebe stores

04/05/2017 20:49

By Jessica DiNapoli 
    May 4 (Reuters) - Fashion chain Bebe Stores Inc  BEBE.O  has 
clinched deals with its landlords to close its approximately 180 
stores, enabling it to avoid filing for bankruptcy and continue 
to sell merchandise online, people familiar with the matter said 
on Thursday. 
    Bebe has almost no debt and a significant amount of cash, so 
the development was rare as many of its peers filed for 
bankruptcy and closed their doors this year amid intense 
competition from online retailers and fast-changing consumer 
tastes. 
    Bebe risked having to file for bankruptcy if its landlords 
did not accept the deals, the sources said. Retailers often file 
for bankruptcy to get out of store leases, leaving landlords 
scrambling to recover their losses in bankruptcy court.  
    However, Bebe was able to offer mall owners, including Simon 
Property Group Inc  SPG.N  and General Growth Properties Inc 
 GGP.N , better deals than what they would have received in a 
bankruptcy protection filing, said the sources. 
    Bebe plans to continue to operate online, selling its 
low-cut dresses, off-the-shoulder tops and short shorts without 
the expense of rent, the sources said. The retailer also has a 
partnership with licensor Bluestar Alliance LLC to further 
develop its brand.  
    The sources requested anonymity because the negotiations 
were private. Bebe, Simon Property and General Growth Properties 
did not respond to requests for comment. 
    BCBG Max Azria LLC, Wet Seal LLC and American Apparel LLC 
are just some of the U.S retailers that filed for bankruptcy in 
the last 12 months. Mall-based retailers in particular are going 
through a period of immense distress, as foot traffic in malls 
falls due to the rise in popularity of online shopping. 
    In April, Bebe said that it expected to record a charge of 
about $20 million related to the store closings, and that 
liquidators were holding store closing sales in the shops. 
    Bebe does not have any term loans or bonds, and had about 
$67 million in cash at the end of 2016, according to its 
financial statements. 
    The company said in March that it had retained investment 
bank B. Riley & Co to explore strategic options, and a real 
estate adviser to work on lease negotiations with landlords.  
    Bebe Chief Executive Manny Mashouf founded the company in 
the 1970s, and the retailer rose to fame in the 1990s and 2000s 
thanks in part to a fashion line it offered with reality TV 
stars the Kardashians. Mashouf owns about 58 percent of the 
company's shares.  
 
 (Reporting by Jessica DiNapoli in New York; Editing by Bernard 
Orr) 
 ((Jessica.DiNapoli@thomsonreuters.com; 646-223-4678;)) 
 
Keywords: BEBE STORES RESTRUCTURING/