After defaulting on its loan, New York & Co. parent RTW Retailwinds has reached an agreement with lender Wells Fargo to enter forbearance until July 15.
Under a revised agreement signed July 2, RTW Retailwinds had to pay $2.7 million on July 3 and must pay $8 million today. The apparel and accessories company additionally is expected to pay the full balance on its revolving loan by Aug. 31.
Amid the coronavirus crisis, RTW Retailwinds made the decision to draw down $40 million from its loan agreement in March. In a June Securities and Exchange Commission filing, the retailer said it believed it had defaulted on the loan but had not received a notice yet. Additionally, RTW Retailwinds revealed in the filing it had begun receiving default notices from vendors and landlords after missing recent payments to vendors and skipping rent for the months of April and May.
The company further warned that bankruptcy was “probable” and that its annual report would “reflect a substantial doubt about the company’s ability to continue as a going concern.” In another SEC filing, the New York & Co. owner said it could shutter its entire fleet of 387 stores should it go bankrupt.
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While its struggles have mounted amid the current health crisis, RTW Retailwinds’ problems predate COVID-19. For the 2019 fiscal year, it reported a 7.4% dip in revenues to $827 million. Profits dropped from $4.2 million ($0.06 per share) in the prior year to a loss of $61.6 million, or 96 cents per share. Comparable store sales were down 5.4%.
RTW Retailwinds is hardly the only retailer to have existing challenges exacerbated by the pandemic, which caused months-long store closures and significant declines in sales for retailers across the fashion and footwear industries. Similar to RTW Retailwinds, struggling womenswear chain J.Jill entered into two forbearance agreements in June.
Meanwhile, Francesca’s and Men’s Wearhouse parent Tailored Brands have, like RTW Retailwinds, warned in SEC filings that they could be forced to file for Chapter 11 protection amid the challenges of the current health crisis. And numerous retailers, such as J.Crew, JCPenney and Neiman Marcus, have gone bankrupt in the past few months as the pandemic takes its toll. Most recently, denim-focused retailers Lucky Brand and G-Star Raw joined the list of bankrupt fashion brands, with both companies filing for Chapter 11 protection on Friday.