And yet another retailer has fallen victim to its inability to adjust to changing consumer tastes.
True Religion, a once popular denim brand, on Wednesday said it was seeking bankruptcy court protection to slash its debt and fix its ailing business, becoming the 23rd retailer or consumer-oriented company to do so this calendar year, according to data compiled for Fortune by S&P Global Market Intelligence. The retail sector is on pace for a record number of bankruptcies.
True Religion Chief Executive John Ermatinger said in a statement that the restructuring deal will allow True Religion to keep stores open even as it focuses on building up its e-commerce. What’s more, the company’s plan, subject to court approval, calls for reducing its debt by three-quarter to $535 million, the company said it would use bankruptcy laws to close or consolidate underperforming stores and, where possible, renegotiate leases with landlords. Still, it is likely True Religion will close stores. The 15 year-old brand had sales of $369.5 million in revenue in its most recent fiscal year but sales have been in decline for some years.
Ermatinger can take solace knowing he has plenty of company: the bankruptcy filing comes at a difficult time for many retailers, particularly mall-based apparel stores. In the last two years, brands like American Apparel, Quiksilver, Wet Seal, Nasty Gal and Pacific Sunwear have filed for bankruptcy protection. Last month, Papaya Clothing joined those ranks.
The abundance of options, the fickleness of young shoppers, the dwindling popularity of many malls and the faster production cycle of fast-fashion chains like H&M and Forever 21 have taken a heavy toll on such retailers. Elsewhere, other retailers have been unable to update their assortment and business model to reflect Amazon.com’s (amzn, +1.63%) growing dominance in some areas. Dwindling sales and inflated stores fleets have combined to put many of them out of business.
“Retail’s troubles are manifold, and the diagnosis is different in each struggling company’s case, but it is widely agreed that the U.S. is over-stored and…