Pricey jeans maker True Religion files for bankruptcy protection
The jeans manufacturer Tech True Apparel Inc. announced Wednesday that it had declared in reorganization by bankruptcy, making it the latest Southern California clothing company to stagger when people accept online shopping.
The fashion maker again was also frayed by design flaws and shows the stores upset because uncontrollable buyers looked for the next novelty.
True religion says that under Chapter 11 of bankruptcy laws, the owner, TowerBrook Capital Partners, a private equity firm, has signed a proposed deal with lenders to reduce debt for about three True Religion quarters as it continues Operating.
“We are taking an important step to reduce our debt, revitalize the iconic brand true religion and position the company for future growth and success,” which involves placing more resources in their online efforts, said the director general of the true Religion, John Ermatinger, in a statement.
The Manhattan Beach company, which employs 1900 people, sells jeans and other clothing in 140 stores with true religion and the latest stitch marks, as well as other stores and department stores. The company said it had closed 20 of its stores last year to cut costs.
Founded in 2002, the true religion has been popularized by its expensive designer jeans range, and from 2007 to 2012, which has almost tripled, becoming a company with a turnover of 490 million dollars in 2013.
The company was previously public, but was denied in 2013, when it was acquired by TowerBrook Capital for 835 million.
Starting in 2013, the true religion “began to suffer a decline in sales caused by the general trend of consumers to move away from traditional retailers to online shopping,” said Dalibor Snyder, chief financial officer of the true religion in a presentation Before the Bankruptcy Court in Delaware United States, where the company filed its application in Chapter 11.
This trend has accelerated in recent years, buyers of brick and mortar e-commerce stores. In addition, the increase in “fast fashion” stores that have lower prices – such as Zara, owned by Inditex of Spain, and H & M (Hennes & Mauritz) of Sweden – have confused true religion and other clothing retailers.
American Apparel is one of many retailers in Los Angeles to declare bankruptcy or cease its activities in recent months. (Mel Melcon / Los Angeles Times)
The fourth resulted in the bankruptcy of these Southern California-based clothing stores such as American Apparel Inc., Pacific Sunwear of California, Inc., Nasty Gal Inc. and Wet Seal.
There was also a general decline in retail as consumers spend more online. Store chain closures in malls and other locations over the past year include Macy Inc., Sears Holdings Corp., J. C. Penney Co. and Payless ShoeSource Inc.
True religion problems were “negatively affected by new product models launched by the company that failed to resonate with the consumer,” Snyder said in his presentation.
During the fiscal year ending January 28, true religion has lost $ 78.5 million for a turnover of $ 369.5 million.
“Their retail outlets were not exciting enough, and they did not put enough marketing power behind their brand to bring them to a level of aspiration – that consumers aspire to buy true religion clothing their high prices.
“You can not excite a consumer in a retail store with a bunch of jeans on the table,” Metchek said. “You do not have to look around. Is there any emotion that defines the brand?”
As part of its agreement with lenders, the true religion plans to redeem new debt for shares of the reorganized company will reduce its debt of more than 350 million dollars. The firm said it had also received additional funding of up to $ 60 million from the citizens’ bank.