David’s Bridal filed for bankruptcy on Monday just days after announcing plans to lay off more than 9,000 workers nationwide later this year.
The popular wedding dress retailer said its stores and e-commerce website will remain open during the financial restructuring process. Davids Bridal executives said they are trying to arrange a sale of the company. The Pennsylvania-based company, which filed for Chapter 11 bankruptcy protection, has $257 million in debt, according to court filings.
“We have successfully modernized our marketing and customer interaction processes and driven our retail service levels to best-in-class,”[ads1]; CEO James Marcum said in a statement. “However, our business continues to be challenged by the post-COVID environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to drive our business forward.”
Founded in 1950, David’s Bridal sells primarily wedding and ball gowns in 294 stores in the United States, Canada and the United Kingdom. In court documents, David’s Bridal said that about 1 in 4 American brides got their wedding dress from the company and nearly 90% of brides visited the store’s website at least once during wedding planning.
David’s Bridal plans to lay off 9,236 employees in three waves between April and August, according to a notice posted Friday by the Pennsylvania Department of Labor. As of April, the company had around 10,000 employees – 2,000 full-time and 8,000 part-time. The company said in a statement Monday that some layoffs have already begun.
“We made the difficult decision to reduce our company’s workforce last week in line with market realities and our go-forward approach,” David’s Bridal said. “This reduction did not affect store employees.”
Marcum said in court documents that about a half-dozen reasons contributed to why David’s Bridal must file for Chapter 11 — one of them being that couples are increasingly wearing less formal wedding attire.
The company filed for Chapter 11 bankruptcy in November 2018 to shed $400 million in debt. The company emerged from bankruptcy in January 2019, just in time to start the busy season. Marcum said the peak sales season runs between January and May each year, but fewer customers bought dresses in the 2019 season because the company’s bankruptcy the year before weakened customer confidence.
Although more people are getting married after the pandemic, “this has not translated into success for David’s Bridal as brides continue to migrate to other retailers for their needs,” Neil Saunders, CEO of GlobalData Retail, said Monday. The higher cost of living couples face these days is pushing them to thrift stores for dresses, and “unfortunately, David’s Bridal has a lot of costs to cover, and current demand just wasn’t bringing in enough to pay the bills,” Saunders said.
Aside from David’s Bridal, the US retail industry is showing signs of a difficult situation. Party City, Serta Simmons and Tuesday Morning have filed for bankruptcy so far this year.
Elsewhere, Best Buy will soon lay off hundreds of store workers who specialize in selling computers and smartphones, the Wall Street Journal reported last week. Disney is involvedwhile – mostly in bigger cities like Atlanta, Chicago and Portland.
Similarly, Bed Bath & Beyond said soas part of a larger effort to avoid bankruptcy. Analysts at UBS expect traders to do so due to the ever-increasing prominence of online shopping; increased borrowing costs and customers tightening their wallets due to inflation.