NEW YORK • Fashion chain Bebe Stores has clinched deals with its landlords to close about 180 stores, enabling it to avoid filing for bankruptcy and continue to sell merchandise online, people familiar with the matter said on Thursday.
Bebe has almost no debt and a significant amount of cash, so the development was rare as many of its peers filed for bankruptcy and shut their doors this year amid intense competition from online retailers and fast-changing consumer tastes.
Bebe risked having to file for bankruptcy if its landlords did not accept the deals, the sources said. Retailers often file for bankruptcy to get out of store leases, leaving landlords scrambling to recover their losses in bankruptcy court.
However, Bebe was able to offer mall owners, including Simon Property Group and General Growth Properties, better deals than what they would have received in a bankruptcy protection filing, said the sources.
Bebe plans to continue to operate online, selling its low-cut dresses, off-the-shoulder tops and short shorts without the expense of rent, the sources said. The retailer also has a partnership with licensor Bluestar Alliance to develop its brand. Bebe, Simon Property and General Growth Properties did not respond to requests for comment.
BCBG Max Azria, Wet Seal and American Apparel are just some of the United States retailers that have filed for bankruptcy in the last 12 months. Mall-based retailers, in particular, are going through a period of immense distress, as foot traffic in malls falls owing to the rise in popularity of online shopping.
Last month, Bebe said it expected to record a charge of about US$20 million (S$28 million) related to the store closings, and that liquidators were holding store closing sales in the shops.
Bebe does not have any term loans or bonds, and had about US$67 million in cash at the end of last year, according to its financial statements.
Bebe chief executive Manny Mashouf founded the firm in the 1970s. The retailer rose to fame in the 1990s and 2000s, due in part to a fashion line it offered with reality TV stars the Kardashians.