- Clothing retailer Francesca’s plans to close 140 of its 700 stores.
- The chain may file for bankruptcy in the next week, Bloomberg reported on Friday.
- In a filing with the Securities and Exchange Commission, the company say it may need to “seek a restructuring under the protection of applicable bankruptcy laws” if it’s unable to “raise sufficient additional capital.”
- The coronavirus has hit retailers hard, with temporary store closures and reduced foot traffic.
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Francesca’s recently announce store closures, CNBC first reported, and may file for bankruptcy in just a week, Bloomberg reported. Sources told Bloomberg that the details could still change.
In a filing with the Securities and Exchange Commission, Francesca’s said that it will close about 140 stores by the end of January 2021. The company also noted that it may need to file for bankruptcy. “If the Company is unable to raise sufficient additional capital to continue to fund operations and pay its obligations, the Company will likely need to seek a restructuring under the protection of applicable bankruptcy laws.”
Francesca’s had 700 locations at the end of the second quarter, so the 140 stores to close make up about 20% of total stores. The retailer also said that it is “evaluating various alternatives to improve its liquidity and financial position” by looking at lease deferrals and further reducing operating costs. It expects to incur charges of $29 to $33 million, according to the filing.
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This year has been disastrous for many retailers, due in part to the coronavirus forcing closures and reduce ed consumer spending. The first nine months of 2020 had more retail and restaurant chains file for bankruptcy than in all of 2019, including J. Crew, Neiman Marcus, and JC Penney’s.
In its second-quarter earnings, Francesca’s announced that sales fell 29% over the quarter, although ecommerce spending was on the rise. The company noted an overall decrease in foot traffic as many of its stores were forced to close temporarily. As of September 4, the retailer said that it had $18.2 million in cash and investments.