Unable to shake off a long slide in sales, teen retailer Aéropostale is set to file for bankruptcy protection this week and close more than 100 of its stores, the Wall Street Journal reported on Monday evening.
Unlike its higher end peers American Eagle Outfitters (AEO) and Abercrombie & Fitch (ANF), Aéropostale has not been able to return to growth in the last years as young consumers turn away from branded clothing. The retailer has also been hurt by the growth of fast-fashion retailers like Forever 21, Uniqlo, and H&M. Aéropostale’s comparable sales fell 6.7% during the holiday quarter.
Aéropostale plans to reorganize under a Chapter 11 filing this week ahead of May rent payments, the Journal reported, citing sources. The clothing chain would close more than 100 of its roughly 800 stores after the filing, according to the Journal.
A spokeswoman did not immediately return a request from Coins2Day for comment.
Aeropostale’s shares were delisted by the New York Stock Exchange last month after shares traded below $1 for an extended period. Its current market value of $30 million is a fraction of that at its peak in 2010, when the company was worth $3 billion on the stock market.
If Aéropostale does file for bankruptcy, it will only be the latest in a growing list of major retailers to do so. Wet Seal, Quicksilver, Pacific Sunwear, Sports Authority, and Vestis Retail (parent of Eastern Mountain Sports) are among the chains to seek bankruptcy protection from the courts in the last 16 months.
Aéropostale was once a Macy’s (M) private brand. It was later sold off and went public in 2002. After years of popularity, the retailer’s sales have been in free fall since 2010, shrinking more than 40%.
Adding pressure to the retailer, a major supplier, MGF Sourcing, has tightened the retailer’s payment terms, demanding upfront payment. MGF is owned by Aéropostale lender Sycamore Partners, a private-equity firm that has bought many retailers. Aéropostale recently accused MGF of breaching their agreement and disrupting supply of some merchandise.