David’s Bridal Is Said to Be Considering Bankruptcy, Again

A booming wedding industry is seemingly not enough to prop up the fortunes of one of the nation’s largest bridal retailers.

David’s Bridal boasts that it sells one of every three wedding dresses in the United States. Yet it continues to struggle to manage its costs after emerging from bankruptcy five years ago, and it is working with advisers as it explores its options.

According to two people familiar with the matter, nothing definite has been decided — but one possibility is for the retailer to file for bankruptcy again within the next few weeks.

The company has been working with the investment bank Houlihan Lokey to explore a sale, which could be included as part of a bankruptcy filing, according to one of the people, who spoke on the condition of anonymity to discuss internal deliberations.

Even if its does file for bankruptcy, David’s Bridal plans to continue to meet the demands of its customer base, which is largely brides, according to one of the people familiar with the matter. That includes delivering dresses and holding fittings. That was the same promise it made when it filed for bankruptcy the first time, in 2018.

In addition to Houlihan Lokey, David’s Bridal has hired the law firm Kirkland & Ellis and the investment firm BRG to explore its options.

“As is our practice as a company, we do not comment on speculation,” Laura McKeever, a spokeswoman for David’s Bridal, said in an email on Friday.

A spokeswoman for Kirkland and a spokesman for Houlihan declined to comment. A representative for BRG did not immediately respond to a request for comment.

The bridal retailer’s financial strain is the latest sign of how even renewed spending on events like weddings has not translated to equally buoyant sales at stores, as consumers pull back on big-ticket items. Companies are also feeling squeezed by inflation and worsening credit conditions.

Corporate bankruptcies in March reached their highest monthly number since July 2020, before the Federal Reserve injected the U.S. economy with billions in capital that has kept many companies afloat.

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David’s Bridal is the latest beleaguered retailer to feel strain as credit conditions have tightened. Bed Bath & Beyond sold stock in February in a move to stave off filing for bankruptcy. In January, Party City filed for bankruptcy. The next month, the discount home goods retailer Tuesday Morning did the same.

Retailers that file for bankruptcy do so to shed debt and streamline their costs. A second filing would give David’s Bridal a chance to make structural changes it did not the first time around, such as closing stores. The retailer, which has roughly 300 locations, mostly in the United States, did not close a significant number of stores during its quick trip through bankruptcy court last time. It emerged from that bankruptcy after two months.

Bridal retailers, in particular, are sensitive to making sure they keep providing goods and services to brides-to-be and wedding planners, who are working against the intense deadline of a wedding day.

In 2022, nearly 2.5 million weddings were held — the most in four decades — after the pandemic caused a backlog. But the pause in celebrations changed the way in which people dressed for weddings and where they purchased their clothes.

More shoppers now head to retailers that don’t cater exclusively to wedding dresses, including secondhand stores. With social distancing making smaller and outdoor weddings more popular, some brides opted for shorter dresses instead of gowns. Supply chain snarls during the pandemic had also disrupted the wedding industry by limiting the availability of new inventory and delaying delivery times.

David’s Bridal wasn’t spared. The retailer had to move production to and from Vietnam, Sri Lanka and China as strict Covid lockdowns hurt production. It also resorted to airfreight, which is more expensive than shipping by boat, in order to get dresses to brides in time.

The retailer has expanded beyond the bridal category by selling attire for other celebrations like quinceañeras and proms. During the pandemic, when it couldn’t get access to professional models, David’s Bridal even enlisted its own employees to be photographed in their gowns. That move became a good worker retention tool during the tight labor market in 2021.

Sumber: www.nytimes.com