In filing for bankruptcy protection, discount department store Stein Mart has raised the possibility of closing “a significant portion, if not all, of its brick-and-mortar stores,” according to a statement. The retailer, which operates 281 stores in 30 states, already has begun a store closing and liquidation process, but is continuing to operate normally in the interim. Stein Mart also has left open the possibility of selling its e-Commerce business and intellectual property.
According to its SEC filing, Stein Mart’s debt obligations total approximately $295 million, including a $240 million senior secured revolving credit facility with Wells Fargo Bank. In connection with the Chapter 11 filing, the retailer has terminated MaryAnn Morin as President, although she remains on the Board of Directors. The retailer filed its Chapter 11 petition in the U.S. Bankruptcy Court for the Middle District of Florida – Jacksonville Division.
In January 2020, Stein Mart agreed to a buyout by an affiliate of private equity firm Kingswood Capital Management, but the deal was called off in April. The retailer had been struggling even before COVID-19 forced closures of its brick-and-mortar stores: for fiscal 2019, which ended Feb. 1, 2020, net sales decreased 3% compared to the previous year, to $1.2 billion, with comp sales dipping 1.4% compared to fiscal 2018.
“The combined effects of a challenging retail environment coupled with the impact of the COVID-19 pandemic have caused significant financial distress on our business,” said Hunt Hawkins, CEO of Stein Mart in a statement. “The Company has determined that the best strategy to maximize value will be a liquidation of its assets pursuant to an organized going out of business sale.”
Stein Mart joins a growing list of retailers that have applied for bankruptcy protection in recent months, including Neiman Marcus, JCPenney, GNC, Brooks Brothers, Ascena Retail Group, Lord & Taylor and Tailored Brands.