One long-time staple of American mall retailers has closed its doors this week, officially filing for bankruptcy.
More Retailers Shut Their Doors
Another one bites the dust, as teen clothing retailer rue21 joins a growing list of US retailers that are shuttering stores and filing for bankruptcy.
Chapter 11 Filed
The Pittsburgh-based specialty retailer filed for Chapter 11 bankruptcy in Delaware on Thursday, listing assets and liabilities worth between $100 to $500 million.
All Stores Closing
rue21 will also be shuttering all of the stores under its umbrella over the next two months, which amounts to 543 stores in malls and outlets across the US, according to related court documents.
Nearly $200 Million In Debt
According to Reuters, rue21 currently employs 4,900 employees and is $194.4 million in debt.
Third Time Unlucky
The filing and closures last week will be surprising to a minority of people, as this is the third time the retailer has filed for bankruptcy. The first Chapter 11 came in 2002, back when the company operated under the name Pennsylvania Fashions, and the second filing was made in 2017.
Changing Consumer Spending
Back in 2017, the company cited a reduction in foot traffic countrywide, as well as shifting consumer spending habits.
A Close Call in 2017
It responded to the second Chapter 11 filing by closing 400 stores across the country and cutting $700 million in debt.
“Going Out of Business Sale”
The retailer will also conduct a “going out of business” sale in the coming weeks, as it plans to wind down operations for good. It will also liquidate the remaining inventory and assets.
Best Path to Payoff
In a sworn statement by Chief Financial Officer Michele Pascoe, rue21 executives believed that closing sales and liquidation would be a better way to pay off creditors than keeping the company operating.
No Eligible Buyers
rue21 initially sought a buyer for their flagging company, but all offers from interested buyers fell below the amount of money they would generate via closing sales and asset liquidation.
No Word From the Country
Aside from the sworn statement and bankruptcy filing, no press releases or public statements have been made on behalf of the company.
C-Suite Shake Up
The news of bankruptcy comes just a few months after rue21 fortified its executive leadership in December 2023, by appointing a new Senior Vice President, Executive Vice President, and Chief Financial Officer.
New Appointments
Elisa Bannon-Jones, former Chief People Officer of nutritional supplements company GNC was appointed as Senior VP. Michele Pascoe, who previously served as CFO at Marsh Supermarkets, was appointed as both Executive VP and CFO for rue21.
“Best-in-Class Leadership”
“These appointments reflect our commitment to assembling a best-in-class leadership team,” said rue21 CEO and President Josh Burriss.
50 Years of Service
rue21 was founded in 1970 under the name Pennsylvania Fashions and would go on to be a retail staple in malls across America for decades, particularly for teenage consumers.
5000 Unemployed
With almost 5000 people staring down unemployment in the coming two months, rue21’s bankruptcy is a concerning announcement and one of several recent bankruptcy announcements and mass job losses in the US retail market.
More Bankruptcy
Last month saw the bankruptcy of Express Inc., another significant mall retailer that was forced to shutter more than 100 stores nationwide due to falling consumer demand and spending. This includes 95 Express stores and all UpWest outlets.
Express Survives
But unlike rue21, Express Inc. will go on to survive and sell its clothing, with CEO Stewart Glendinning pledging to “make meaningful progress refining our product assortments, driving demand, connecting with customers and strengthening our operations.”
A Growing Trend?
Other retailers such as crafts company Joann and British cosmetics company The Body Shop have also been hit, with the former filing for bankruptcy and the latter closing the curtains on its US subsidiary.
Stressful Time for Retailers
With a drop in consumer spending across the board and significant layoffs in multiple industries, it’s a stressful time for mall outlets that need to get more customers through their doors. rue21 may just be the first in a series of permanent closures.
The post – Fashion Chain rue21 to Close 540 Stores as it Files for Bankruptcy – first appeared on Wealthy Living.
Featured Image Credit: Shutterstock / Jonathan Weiss.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
