As the retail industry continues to face challenges, several popular clothing retailers have made the decision to shut down all of their physical stores. Outdoor Voices, an activewear brand known for its mission to promote fun and movement, has unexpectedly closed all 15 of its retail locations. The company has struggled to compete in the competitive activewear market, despite its unique positioning against giants like Lululemon. The closure of the stores has left employees without severance, and there has also been a significant reduction in headquarters staff. On the final day of operation, the stores offered a 50% off sale to clear inventory. Outdoor Voices plans to continue its business online, transitioning to a digital-only model. This move reflects the broader challenges that direct-to-consumer brands face when expanding into physical retail, particularly in high-cost locations.
In a similar vein, the Swiss subsidiary of clothing chain Esprit has also closed all of its branches. The closure affects all 23 stores and around 150 full- and part-time employees. The bankruptcy and closure were attributed to global economic development, increased energy and logistics costs, negative consumer sentiment, and high rents. The Swiss Esprit subsidiary had a debt of around twelve million francs at the end of 2023. Esprit clothes will still be available in 19 branches operated by franchise partners and in 150 clothing stores with various brands. The company will focus on reorganizing and concentrating on the online shop and trading with franchise partners. Esprit Retail Switzerland AG is owned by Esprit Holdings Limited, listed on the Hong Kong stock exchange. The bankruptcy filing of the Swiss branch has no direct material impact on the group.
Adding to the list of retailers facing challenges, US fashion teen apparel retailer brand 'rue21' has filed for bankruptcy for the third time, signaling its intent to close all 540 stores and sell its intellectual property. The decision to seek Chapter 11 protection stems from its inability to secure a buyer willing to pay more than the company's estimated liquidation value. This marks the third bankruptcy filing for the Warrendale, Pennsylvania-based retailer, previously seeking protection in 2003 and 2017. rue21 specializes in affordable fashion for teens and young adults, has a workforce of approximately 4,900 employees, and carries a debt load of USD 194.4 million. Despite once operating 1,000 stores across U.S. malls, rue21's footprint has steadily declined, with about 400 stores closed during its 2017 bankruptcy restructuring. The company has struggled with sustained challenges, notably the surge in online shopping catalyzed by the COVID-19 pandemic. In a bid to address operational hurdles, rue21 sought additional capital in 2022 and secured a USD 25 million investment from existing lenders, resulting in significant ownership changes. rue21 plans to divest its brand and intellectual property separately from its store closure proceedings and has enlisted Gordon Brothers to manage the store closing sales.
Luxury lifestyle retailer Oka, founded by Viscountess Annabel Astor, has also faced financial woes and filed for bankruptcy in the US. Oka has closed its American stores in Dallas, Houston, and Westport. The company, which has been trading successfully in the UK for 20 years and launched in the US in 2019, cited over-ambitious expansion as a reason for the decision. Oka hopes to continue trading in the UK by filing for a Company Voluntary Agreement, which would involve closing one of its 13 UK stores and laying off up to 250 staff. The bankruptcy filing is a Chapter 7 filing, while the UK restructuring would be a variant of a Chapter 11 filing. Oka's owner, Italian firm InvestIndustrial, turned down a management buyout proposal from Lady Astor, leading to her resignation from the board. The US arm of the company has been struggling since acquiring US furniture/interiors brand Wisteria in 2019 and took out an $11.5 million loan in 2021 to stem losses.
These closures and bankruptcies highlight the challenges faced by retailers in a rapidly changing industry, particularly in the face of increased competition and the shift towards online shopping.