Aéropostale Inc. is preparing to file for bankruptcy protection this week and close more than 100 stores, according to people familiar with the matter, as the teen-apparel retailer contends with mounting losses and falling sales.
New York-based Aéropostale plans to seek chapter 11 protection in the next few days before May rent payments are due, the people said. It is in advanced talks with specialty lender Crystal Financial LLC on a loan to finance its operations in bankruptcy, they added.
The retailer would close more than 100 of its roughly 800 stores soon after filing and potentially more later, the people said. The company plans to reorganize around its remaining stores, but the precise contours of its restructuring plan remain unclear, they added.
A number of mall-based specialty retailers have filed for bankruptcy in recent years as declining mall traffic, changing consumer tastes and competition from "fast-fashion" chains like Hennes & Mauritz AB and Fast Retailing Co.'s Uniqlo eat into their sales.
Teen retailer Pacific Sunwear of California Inc., known as PacSun, sought bankruptcy last month, citing the "shifting retail landscape." In 2015, women's formalwear retailer Cache Inc., teen-focused Wet Seal and surfwear seller Quiksilver Inc. filed for chapter 11 protection.
But it is funny - fashion is fickle. And in the old days, the "fashion store" could stay in business by changing its product mix to keep up with the times and trends. Today, single-brand stores are popular, so long as the name of the brand (as plastered on all of the merchandise) is considered coveted and cool. Once the cool-factor wears off, the entire company goes bankrupt and the store closes. It is an interesting change in the paradigm of retailing.
Abercrombie & Fitch, who once sold elephant guns and fly rods to Ernest Hemingway, became a teen retailer and similarly saw its fortunes wax and wane. Fortunately for them, they were able to create "spin-off" brands such as "Hollister" which is the new "name" t-shirt to have today. Oddly enough teens covet the Hollister brand, but would not be caught dead today in an Abercrombie shirt. If only they knew!
Of course, the entire point of "brands" as they were originally envisioned, was to allow consumers to determine the source of goods or services - that is the definition under Trademark Law. You sought out a reliable brand not because you wanted to show off the brand to friends and strangers, but because you knew that brand was reliable. Today, it is all switched around. Everything is made in China and is of about the same quality level. The only distinguishing feature of a "Hollister" shirt is the name on the front. You are literally buying a Trademark to wear, not an actual piece of clothing. Or more succinctly, the cost of clothing is incidental to the transaction - the bulk of the "cost" and the value to the consumer is in being able to display the brand.
It is, in a way, hilarious. And it illustrates how people are sheep. You tell people that it is desirable to drive a nail into their forehead, and within a week, you will see thousands or millions of people with nails sticking out of their head. Oh, wait, that sounds a lot like the body-piercing trend, doesn't it? Once again, I try to be sarcastic and it comes too close to reality because reality is so ridiculous today.
But it is ridiculous. And if you were to say that people are going into credit card debt so they can overpay for a t-shirt with someone's name plastered on it, in the abstract, you would think that was insane. But it is the reality of modern consumerism.
And we wonder why we're broke!