BCBG Max Azria bankruptcy is on process
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BCBG Max Azria has filed for bankruptcy protection.
The filing is the latest step in a restructuring plan aimed at rescuing the business, following the closure of 120 stores.
“Like many other apparel and retail companies, BCBG has fallen victim in recent years to adverse macro-trends, including a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics away from branded apparel,” said chief restructuring officer Holly Felder Etlin in papers filed with the Federal Court in Manhattan.
As reported in January, the fashion label is crippled with a debt said to be as high as US$665 million. More recent reports say the “secured debt” is worth about $485 million. But its total sales last year were just $600 million. The restructuring plan is dependent on a $45 million loan which must be approved by the court.
The company had embarked on a restructure which would involve slashing its US store network and refocusing on e-commerce and wholesale sales. The company has flagship stores in Tokyo and Hong Kong, but it is the wholesale division which supplies stores bearing the brand’s name in other Asian cities, including Ho Chi Minh City. Retail accounts for 71 per cent of its turnover.
One of BCBG Max Azria’s advisors told landlords in February that its retail sales had declined 20 per cent during the past three years – a major change of fortune for a company which in 2013 was mulling an offer valued at $1 billion.
Under January’s restructure plan, the company was looking at closing 120 of its 200 US stores – but now reports suggest almost all of them will be closed under bankruptcy protection. The company also has mounting debt to landlords in unpaid rent.
BCBG Max Azria Group was founded by Tunian Max Azria in 1989. Educated in France before developing a passion for fashion, he was later based in California where he drove the BCBG Max Azria brand, but he is no longer associated with the company. His brother Serge founded women’s fashion labels Joie, Current/Elliott and Equipment.
Dresses from BCBG Max Azria have been photographed firmly fitting celebrities including Selena Gomez and Drew Barrymore.
BCBG is an acronym for the French phrase “bon chic, bon genre” or “good style, good attitude”.
Questions & Answers
Q.What is the primary reason stated for BCBG Max Azria's financial difficulties?
What is the primary reason stated for BCBG Max Azria's financial difficulties?
The company has suffered from adverse macro-trends. These include a general shift from brick-and-mortar to online retail and changing consumer demographics moving away from branded apparel.
Q.How much debt is the company currently facing, and what were its sales last year?
How much debt is the company currently facing, and what were its sales last year?
The company is crippled with a reported debt as high as US$665 million, with secured debt at about $485 million. Its total sales last year were only $600 million.
Q.What percentage of BCBG Max Azria's business comes from its retail operations?
What percentage of BCBG Max Azria's business comes from its retail operations?
Retail sales account for 71 per cent of the company's total turnover. This sector has seen a significant decline, with sales dropping 20 per cent over the past three years.
Q.How many of its US stores is BCBG Max Azria planning to close as part of this restructuring?
How many of its US stores is BCBG Max Azria planning to close as part of this restructuring?
Initial plans in January aimed to close 120 of its 200 US stores. However, more recent reports suggest that almost all of its US stores will now be closed under bankruptcy protection.