BCBGMaxAzria Outlines Store Closing Plan
Los Angeles–based brand BCBGMaxAzriaGroup, which has been weathering some tough financial times lately, has outlined its strategy for closing nearly 400 stores in its retail chain of 570 outposts.
About 50 of the 170 stores in the United States will remain open and another 128 stores of the approximately 400 outside of the United States—with concentrations in Canada, Europe and Japan—will remain up and running, said Seth Lubove, a company spokesman.
Prior to deciding to close its unprofitable stores, BCBGMaxAzria laid off 123 people effective Nov. 1. The BCBGMaxAzria layoffs came months after new interim chief executive Marty Staff came on board in April to help turn the company around. The company’s founder, Max Azria, who started the high-end clothing venture in 1989, was put on paid leave, but his wife, Lubov Azria, is still on board as chief creative director.
Staff is hunkered down, trying to figure out how to ditch store leases and boost e-commerce sales to get the long-running contemporary brand righted after years of losing money.
In a recent company statement, the executives at BCBGMaxAzria said they were focusing on a future that envisioned more digital, e-commerce, selected retail locations, in-store boutiques and licensing agreements.
For years, there have been rumors floating around that the clothing company would be filing for bankruptcy. It may not necessarily be out of the woods.
In 2013, Max Azria started negotiations with Guggenheim Partners LLC, which held about $475 million of the company’s $685 million debt, to restructure that debt. In 2015, Guggenheim Partners converted its debt into equity in the company and BCBG got an infusion of $135 million from a group of investors that included Guggenheim Partners and its affiliates.
But that appears not to be enough. BCBGMaxAzria has enlisted AlixPartners to help restructure its debt load. The company is hoping to ask suppliers to take less money than owed for outstanding bills. It is exploring all options. The last option is Chapter 11 bankruptcy protection.
In an email sent weeks ago to vendors, BCBGMaxAzria’s interim chief executive explained that the company was working on a plan to ensure the company’s success for years ahead. “During this time,” he said in the email, “business will not be as usual, disruptions will occur and are unavoidable. We value your partnership and dedication to our brand, and we hope to stabilize just as soon as possible.”
Meanwhile, Max Azria and his wife have put their 17-bedroom home in the Holmby Hills area of Los Angeles back up for sale, increasing the asking price from $85 million to $88 million.