Bloomberg News

Coldwater Said to Prepare Bankruptcy Filing After Sale Bid (1)

March 31, 2014

Coldwater Creek Inc. (CWTR:US), a women’s clothing retailer that hasn’t been profitable since 2007, may seek bankruptcy protection as soon as this week, according to three people with knowledge of the matter.

The company might seek to liquidate its assets in order to repay its creditors, said the people, who asked not to be identified because the matter isn’t public. The filing would come five months after Coldwater said it was exploring strategic alternatives, including putting itself up for sale.

Coldwater is the latest casualty of slowing mall traffic, where consumer caution has pushed stalwarts such as pizza seller Sbarro LLC and clothing merchant Dots LLC to seek protection from creditors. Sales at Coldwater stores open at least a year, considered a key gauge of retail performance, plunged 17 percent in the quarter ended Nov. 2.

Sharon Stern, a spokeswoman for Coldwater with Joele Frank Wilkinson Brimmer Katcher, didn’t comment immediately. Denise DesChenes, a spokeswoman for Perella Weinberg Partners LP, hired by Coldwater as a restructuring adviser, didn’t immediately respond.

Dennis Pence, a former Sony Corp. executive, started Coldwater as a catalog in 1984, selling women’s accessories and gifts, according to a 2005 Businessweek profile that highlighted the company’s rapid growth at the time. The Sand Point, Idaho-based company began opening stores in the 1990s and had 379 stores as of Nov. 2.

Coldwater shares tumbled (CWTR:US) 75 percent to 17 cents at 2:27 p.m. in New York. News of the planned bankruptcy filing was reported earlier today by Dow Jones.

Annual Losses

The company, which hasn’t announced when it will report its fourth-quarter results, has reported three quarters of losses totaling $59.6 million this fiscal year, according to data compiled by Bloomberg. It had a loss of $81.8 million last year.

Restaurant chain Sbarro sought bankruptcy protection this month after struggling with mounting competition in the fast-food sector and dwindling mall traffic. Clothing sellers have also faced challenges with Dots, a women’s clothing chain with 400 stores, shutting down after filing for bankruptcy in January.

In 2012, an affiliate of Golden Gate Capital Corp. extended a $65 million senior secured term loan to Coldwater in return for preferred stock that’s convertible to as much as 6.1 million shares of common stock, according to company filings.

The San Francisco-based private-equity firm has acquired or bought stakes in a number of troubled retailers. It bought Eddie Bauer out of bankruptcy in 2009 for $286 million.

To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Jodi Xu in New York at jxu205@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Faris Khan, Chapin Wright


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus