Teen retailers that do not keep up with fashion trends are very likely to have a hard time generating the revenue necessary to stay in business. Many teen clothiers are noticing a steady decline in sales due to new competitors in the market. Many shops in New Jersey, and across the United States, are feeling the impact and are being forced to take action to avoid shutting their doors. These businesses may make the important decision to file for Chapter 11 bankruptcy in an effort to save their companies.
Deb Shops, which focuses primarily on young women's and teen fashion, has announced that it will be filing for Chapter 11 bankruptcy. This is the second time in four years that the clothier has reached out to file for bankruptcy. The first time was in 2011 when the company was sold. A large goal of this bankruptcy is to attempt to find a buyer. If no buyers step forward, the company may be forced to liquidate its assets.
According to the company, revenue is down by 10 percent from 2013. Deb has 295 locations in 44 states and a combination of 4,000 part- and full-time employees. The company's president believes that the lack of sales is due to the stores appearing tired and old from a lack of investment back into the business. Buying trends are another factor, as teens have been spending their money in more fashion-forward stores like Forever 21 and H&M.
Although the situation may look grim, it is possible for New Jersey businesses to find hope by filing for Chapter 11. With the assistance of the court, businesses may be able to reorganize and get a better handle on their financial struggles. This may also allow them to look more attractive to suitable prospective buyers. Through the process, the businesses may be able to emerge stronger than before and in better financial positions, allowing for successful futures.
Source: Reuters, "UPDATE 1-Cerberus-owned Deb Shops files for bankruptcy", Tom Hals, Dec. 4, 2014