Some otherwise dead retailers just won't die.
The Great Recession that rippled across the globe in 2009 and caused broke consumers to pull back on their profligate spending led to a litany of retailers going bust. Only the strongest retailers survived the economic downturn, which effectively exposed the U.S. retailing industry for having too many stores open.
The continued rise in online shopping didn't help the cause of many struggling bricks and mortar retailers. Retailers such as Delia's, Circuit City, RadioShack, Borders and Linens n Things were several of the most prominent causalities. At the same time, those left standing such as big-name retailers Abercrombie & Fitch (ANF) , Sears Holdings Corp. (SHLD) , Gap (GPS) , American Eagle Outfitters (AEO) and Aeropostale (ARO) have gone on to shutter hundreds of flagging stores.
Now, years after the Great Recession officially ended in June 2009, a couple of bankrupt retailers are re-emerging on the scene to try and take on a second life. The companies have exited the bankruptcy process with fewer unprofitable stores in operation and new management teams hungry to get a successful turnaround story on their resume. TheStreet takes a brief look at three of the retailers that are attempting comebacks this year after experiencing nearly devastating setbacks.
Entered bankruptcy: January 2015
Emerged from bankruptcy: April 2015
One-time stock symbol: "WTSLA"
When private equity firm Versa Capital Management got the go-ahead to buy Wet Seal's assets out of bankruptcy almost a year ago in early April, it paid $7.5 million in cash and assumed $20 million in debt-financing.
Today, Versa -- which also owns retailers such as Avenue, Bob's Stores, and Polartec -- owns a Wet Seal banner with 170 stores and revenue north of $140 million, according to the company, as well as an e-commerce platform. At its peak, Wet Seal had revenue of about $620 million and adjusted earnings before interest, taxes and depreciation (EBITDA) of nearly $50 million from about 558 stores for the fiscal year ended Jan. 28, 2012.
New leadership is moving quickly to re-establish the chain as place for 18-34 year old females to get affordable California lifestyle inspired threads. The company has a new, more sophisticated logo, a refreshed website featuring sexy models and plans to begin refurbishing its haggard stores.
Still, regaining customers won't be an easy task for the once bankrupt Wet Seal. "You can't underestimate how difficult these turnarounds are -- usually when a business has gone in this direction, there are a lot of things that have gone wrong," said Melanie Cox, the new CEO of Wet Seal, to TheStreet in an interview.
A photo posted by Joe Warnstrom (@thetudorhouse) on
Entered bankruptcy: October 2015
Emerged from bankruptcy: January 2016
One-time stock symbol: "APP"
American Apparel, purveyor of expensive hipster clothes made in America, filed for bankruptcy protection in October 2015. The company's once thriving business was toppled by a huge debt load, a dizzying fall in sales, huge debts, and a drawn-out legal fight with ousted controversial founder Dov Charney. At the time of the bankruptcy filing, American Apparel's losses over the previous five years topped a staggering $340 million.
A consortium of hedge funds, including Standard General and Monarch Capital, took over American Apparel after injecting capital in the period before, and during, the bankruptcy case.
As of Jan. 10, American Apparel had about 218 stores, down from roughly 230 locations at the time of its bankruptcy filing. Seeing as it's out of the watchful eye of Wall Street and has deep-pocketed financial backers, American Apparel is likely to close additional stores in an effort to become more efficient. But returning American Apparel to some form of relevance, and profits, will recquire more than simply shuttering bad store locations.
Similar to Cox at Wet Seal, American Apparel's CEO Paul Schneider, who assumed the top job in January 2015, is getting back to the basics. For the spring and summer, American Apparel intends to roll out about 130 new styles targeted to consumers in their 20s and 30s. Schneider is also slightly toning down American Apparel's notoriously racy advertising, while staying committed to making clothes in America.
Planned design of a new Circuit City store.
Entered bankruptcy: November 2008
Emerged from bankruptcy: Technically it didn't
One-time stock symbol: "CC"
After years of mismanagement and brutal competition in the electronics space from Amazon (AMZN) , Best Buy (BBY) , and Walmart (WMT) , beleaguered Circuit City finally closed its doors in 2009. The company was fresh off a mind-boggling $327.4 million net loss in 2007, when excluding one-time items. And the losses kept on coming. For the six-months ended Aug. 31 2008, Circuit City racked up losses of some $331 million, backing out one-time items.
When Circuit City began liquidating its inventory in January 2009 after entering bankruptcy in November, it had about 567 stores nationwide, ranging in size from 15,000 to 45,000 square feet.
The "Circuit City" brand was purchased out of bankruptcy by marketing conglomerate Systemax (SYX) , which used the brand to hawk electronics and other devices online at CircuitCity.com. In December 2012, CircuitCity.com was merged with TigerDirect, causing the brand to disappear. But in October last year, the Circuit City brand and associated intellectual property was sold to retailer Ronny Shmoel.
Shmoel is planning to open Circuit City stores (which will be much smaller than those from yesteryear) equipped with touchscreen terminals, which will let customers search through inventory. The stores will offer tablets, headphones, drones and other electronics, including the company's own brand of cheap computer accessories.
The first Circuit City stores are likely to open in the Dallas area this spring. A CircuitCity.com landing page has already launched, which shares the history of the brand and invites people to apply for jobs. Shmoel has an ambitious goal of opening 50 to 100 Circuit City stores by next year. Good luck.