Apparel and accessories retailer, Francesca, is set to close down 140 stores across the US by January due to the biting effects of the coronavirus pandemic. The clothier said they might also file for bankruptcy given the burden of debts they have accumulated as a result of declining sales. The retailer said the bankruptcy protection would help to stabilize its finances and the shutting down of some stores would go a long way to cut overhead expenses.
According to a filing with the Securities and Exchange Commission (SEC), Francesca said they are also looking for ways to obtain concessions and deferrals as well as raise sufficient capital to get things running smoothly for the business again.
“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 said in the filing.
Due to the closure of stores across the country, the company estimates to incur impairment charges that range from $29-$33 million. With the shutting down of 140 stores occasioned by COVID-19 traffic and purchase restrictions, the company will be shifting attention and devoting more resources to online sales in order to get even again.
Several other retailers such as J.C. Penney, Neiman Marcus, and Brooks Brothers among others have filed for bankruptcy, with Stein mart shutting down completely and liquidating its business.
Within the past one year, Francesca’s stocks declined from a market value of $7.2 million by 85%; and earlier this week, the company’s shares dropped to $2.36 by 35% during trading. Within this same period, the company’s S&P 500 index is up by 16.2% as well.
Source: cnbc.com
