A Stein Mart store in King of Prussia, PA.
The off-price chain Stein Mart announced Wednesday it has filed for Chapter 11 bankruptcy protection and plans to permanently close most, if not all, of its stores, adding to the turmoil in a retail industry that has been hammered by the coronavirus pandemic.
The Jacksonville, Florida-based company said in a press release that it has already launched a liquidation process to kick off going-out-of-business sales. It said it is evaluating alternatives, including the potential sale of its e-commerce operations and intellectual property.
“The combined effects of a challenging retail environment coupled with the impact of the Coronavirus pandemic have caused significant financial distress on our business,” Chief Executive Hunt Hawkins said in a statement. “The Company lacks sufficient liquidity to continue operating in the ordinary course of business.”
Stein Mart shares, which are priced under $1, sank 35% in afternoon trading Wednesday morning. The company has a market cap of $9.1 million. Its stock has tumbled more than 70% this year.
Stein Mart operates 281 stores across 30 states in the U.S., according to its website.
More than 40 retailers have filed for bankruptcy in 2020, including the home-goods chain Pier 1 Imports, department store operators Neiman Marcus and J.C. Penney, and apparel brands J.Crew, Brooks Brothers and Ann Taylor-owner Ascena Retail Group. Analysts expect that list to continue to grow into the holiday season, as companies that were already struggling before the Covid-19 crisis are pushed over the edge.
Some are emerging from their restructurings as smaller businesses, with fewer stores and new owners.
The biggest U.S. mall owner Simon Property Group and the apparel licensing firm Authentic Brands Group, for example, have won a bidding contest to acquire the upscale men’s chain Brooks Brothers out of bankruptcy and keep at least 125 Brooks Brothers locations open.
The bankrupted kitchen accessories chain Sur La Table was bought out of bankruptcy for nearly $90 million, with plans to keep at least 50 stores open.
“There is an appetite [for bankrupted retailers] and we are seeing it,” Perry Mandarino, head of restructuring and co-head of investment banking for B. Riley FBR, said in an interview. “If you have a good brand and if you have a good, loyal customer base, you will have interest and you will survive.”
Stein Mart has brought on Foley & Larder as its restructuring counsel, Clear Thinking Group as its restructuring advisor and PJ Solomon as its investment banker.