It’s official.
After 10 days of speculation that David’s Bridal LLC, the only sizable U.S. bridal retail chain, was nearing bankruptcy, the company has done so in the U.S. Bankruptcy Court for the District of New Jersey. The 70-year-old business expects to file a recognition proceeding in Canada, as well, and one of its subsidiaries is planning to start administration proceedings for its business in the U.K.
With 300 stores – mostly in the U.S. — the news may concern thousands of brides, bridesmaids and prom-goers with existing orders or plans for David’s Bridal purchases. The company said its stores will remain open, and it “intends to continue operating in the ordinary course, including by fulfilling all customer orders without disruption or delay.”
However, staffing and customer service – a key ingredient in the bridal market – could be an issue. On Friday, David’s Bridal announced that it is laying off 9,236 employees, the bulk of its workforce, in the next few months.
The 70-year-old Conshohocken, Pennsylvania-based company would not disclose how many total employees it has. The 9,000-plus impacted employees were said to have received warning letters that their jobs were subject to termination, and job cuts at David’s Bridal corporate office were believed to have been made, according to one longtime bridal industry executive.
A request to David’s Bridal Monday morning seeking further comment was not immediately returned.
The retailer, which has Oaktree Capital Management as a leading shareholder, has seen its market share shrink. Under the leadership of former president and chief executive officer Robert Huth, David’s Bridal had 319 stores and sales exceeding $760 million. In the fall of 2012, David’s Bridal was purchased by the private equity firm Clayton, Dubilier & Rice for $1.05 billion. At that time, the retail chain had about a 36 percent share of the bridal market compared to its estimated 18 percent today, one industry source said.
David’s Bridal is reportedly working with the investment bank Houlihan Lokey. Vice president of communications John Gallagher declined comment Monday.
The retailer’s online platforms, including its Pearl platform and vendor marketplace, will remain up-and-running for brides working on their wedding planning. Further, members of Diamond, the company’s industry-leading loyalty program, can continue to derive value by earning and redeeming rewards, and the company intends to continue honoring gift cards, returns and exchanges at this time. To uphold its commitments to customers, employees, and partners, the company is seeking customary “first day” relief from the court, including authorization to continue payment of employee wages and benefits, maintain certain customer programs, and honor obligations to critical vendors.
Galina for David’s Bridal Spring 2020.
Courtesy Photo
In a WARN notice filed in its home state of Pennsylvania, David’s Bridal, a 300-unit retailer, highlighted a three-phase plan with the first round of layoffs starting today. The second round will run from May 13 through May 27, and the third phase is planned to get underway on June 12 and run through Aug. 11. In Pennsylvania, 15 stores will be impacted.
Prior to Monday’s filing, David’s Bridal initiated an evaluation of potential strategic alternatives, including a marketing and sale process for its assets. The company said that due to its liquidity constraints, it was unable to finalize its marketing and sale process out of court, but it will continue to explore a sale during the bankruptcy process. David’s Bridal said it has been strategically managing inventory and evaluating its store count “to maximize value and the prospect of a successful going concern transaction.”
James Marcum, chief executive officer of David’s Bridal, said, “Over the last several years, we have taken meaningful strides in our transformation to fulfill the needs of the brides of today and tomorrow. We have successfully modernized our marketing and customer interaction processes and driven our retail service levels to best in class. Nonetheless, our business continues to be challenged by the post-COVID[-19] environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward. We are determined to stay focused on our future, because we believe we have an important role in ensuring that every bride, no matter her budget, can have her perfect dress.”
“We are grateful to the seven decades of brides and customers who have trusted us with the most special events of their lives, as well as to the dedicated associates and valued partners who make our customers’ dreams come true. We remain as committed as ever to providing excellent service, delivering for our brides and customers, and being part of magical moments.”
Source: WWD