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Yet another US teen retailer ‘ Papaya ' files for Bankruptcy
H & M to go ‘ online ' in India next year
Papaya Clothing , owned by Cornerstone Apparel Inc ., has become the latest teen fashion retailer to file for bankruptcy protection in the US . It has now joined the list of the other 11 mall-based chain stores such as American Apparel , Wet Seal , Sports Authority and PacSun that went bankrupt in the first half of 2017 .
The company , which expanded rapidly and opened around 50 of its 80 stores in the last six years , found itself with inadequate funds to address all of its financial obligations . “ The expansion efforts took a heavy financial toll on the retail business operations of Papaya as it racked up construction and operating costs ,” reportedly said Tae Yi , President and Chief Financial Officer of the company .
In addition , the dwindling store sales , as an outcome of a general industry-wide switch in consumer buying preferences – from ‘ instore ’ to ‘ online shopping ’ and the increased competition from the e-commerce sector – forced the fashion company to file for bankruptcy .
It is pertinent to mention here that Papaya fetched more than US $ 134 million in sales last year and is eager to operate as a retail company instead of using bankruptcy ( protection ) to become a wholesale apparel company or an intellectual property licensor , the media reports claim . It has already closed 22 of its operational stores and further seeks support from the court to exit tenancies for 8 more stores . The shutting of stores will also lead to job loss of around 1,300 employees , who are currently employed at Papaya .
H & M , the Swedish multinational fast fashion brand , has decided to start its online operations in India by next year . The move is aimed at competing with Spanish rival Zara which will start selling online in the Indian market by the end of 2017 .
It is important to note that the Swedish fashion brand has outshined its Spanish rival Zara in India and managed to grab a huge market in just one financial year .
Zara noted sales of around Rs . 842 crore for the year ending March 2016 , while Indian arm of H & M posted sales of Rs . 435 crore in six months from December 2016 to May 2017 . After getting the prodigious response from Indian customers since its venture in India in 2015 , H & M has also declared to open 50 more stores by 2020 with an investment of around Rs . 700 crore .
US Bankruptcy Court approves bids for BCBG
The US Bankruptcy Court in New York has approved bids from Marquee Brands and Global Brands Group Holding to buy out struggling fashion label BCBG Max Azria for a total of US $ 165 million . The court order states that both the labels ’ intellectual property rights as well as operational privileges for the 22 brick and mortal retail locations in Los Angeles will now be jointly succeeded by Global Brands and Marquee . The winning bid was placed on June 9 , far before the June 20 deadline imposed by the court and a final approval to confirm the reorganization plan for the brand is likely to be made by July 31 .
As is customary with bankruptcy procedures , several bodies offered bids to the court to gain financial interest in BCBG . However , the winning bid came from a group of four parties – Marquee tendered US $ 106 million for BCBG ’ s Intellectual Property Rights and Global Brands offered US $ 23 million for BCBG ’ s retail operations , e-commerce site and inventory . The outstanding US $ 36 million was covered by Hilco Global , an Illinois-based financial services business and Boston-based investment firm Gordon Brothers .
BCBG filed for Chapter 11 bankruptcy protection on February 28 , with more than US $ 460 million in debt and has closed 120 US stores that afflicted a loss of US $ 10 million in 2016 . Now , BCBG operates around 71 standalone locations as well as 276 instore shops at retailers such as Bloomingdale ’ s , Dillard ’ s , Lord & Taylor and Macy ’ s – all of which have been operating profitably . The brand also has stores in Japan , France and Canada that may face closures if no corresponding deals are made in those countries .
14 Apparel Online India | JULY 16-31 , 2017 | www . apparelresources . com