Retail’s reckoning continues apace.
Brookstone, a specialty products retailer selling everything from ergonomic chairs to air filters, said on Thursday it had filed for bankruptcy and was in the process of closing all of its 101 mall stores. The chain blamed “continued deterioration of traditional mall traffic.” But its 33% revenue decline last year was far sharper than those of other mall-based chains, with many of Brookstone’s problems, including supply chain problems and e-commerce glitches, being of its own making.
With the bankruptcy coming only four years after an earlier Chapter 11 filing, Brookstone becomes a rare so-called “Chapter 22” case, an derisive term in the legal world for companies that have sought bankruptcy protection twice. Brookstone joins a long list of retailers filing for bankruptcy in the last two years, including large ones such as Toys ‘R’ Us and The Sports Authority.
“Today we have taken several important steps to restructure the business and ensure that Brookstone will be well-positioned to succeed for years to come,” Brookstone CEO Piau Phang Foo said in a statement. “The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint.”
Though Brookstone is a small chain with sales of $351 million last year, these closings are the last thing mall developers need. A number of retailers such as The Limited, Wet Seal, Rue21 and Bon-Ton have gone bankrupt in the last few years, while anchor chains Macy’s, J.C. Penney, and Sears have closed hundreds of stores, putting pressure on the likes of Simon Property Group and Macerich.
Brookstone would like to keep its 35 remaining airport stores open but needs a buyer for that. Failure to do so could mean liquidation. Indeed, most retailers that file for bankruptcy protection ultimately liquidate. The company has lined up a $30 million bankruptcy loan to keep the doors open at those airport stores as it wends its way through its Chapter 11 case.