Fashion retailer bebe stores is exploring strategic alternatives for its besieged business, with a report from Bloomberg indicating that bebe plans to close all 170 of its stores. The report noted that the brand will focus solely on its e-Commerce operations going forward.
Although the company is trying to close the stores without filing for bankruptcy, Chapter 11 may be required if too many landlords are unwilling to negotiate, according to the report. bebe has no significant debt, but the company has lost approximately $200 million over the past four years, which may complicate the negotiation process.
Apparel retailers such as Wet Seal and The Limited have shut down brick-and-mortar operations recently, but they made the decision as part of a larger move to shutter their businesses entirely, including e-Commerce sales. Even as more mall-based retailers experience the same types of difficulties, it remains rare for brands to scale back to online operations exclusively, especially as more pure-play retailers move to build out small brick-and-mortar presences.
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Luxury brand Kenneth Cole is the most recent example of this online shift, saying in November 2016 that it would close all 63 of its outlet stores to concentrate on its e-Commerce site and wholesale business. The brand doesn’t disclose financial reports, so the progress of its stripped-down business will likely remain unknown to the public as stores close.
But the bebe move shows that retailers are willing to take sometimes drastic steps to scale down their businesses in order to adapt to changing consumer behavior. Retailers taking this route will have to optimize the online experience to make every product accessible and invest heavily in supply chain and fulfillment functions. With shoppers having only one direct outlet to find and purchase bebe products, the company will be under more pressure than ever to create the best experience possible.
bebe has retained B. Riley & Co. as its financial adviser and has also engaged a real estate adviser to assist with options related to its lease holdings.
