Stein Mart Inc. becomes the latest nationwide chain to go bankrupt as the coronavirus pandemic continues to devastate the retail sector.
The discount department store announced today that it has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division. It has sought a judge’s approval to maintain business operations in the near term, such as paying employee wages and benefits as well as suppliers and vendors, plus using its cash collateral.
As part of its bankruptcy proceedings, Stein Mart is evaluating strategic alternatives, including the potential sale of its e-commerce business and related intellectual property. It also expects to shutter a “significant portion, if not all,” of its brick-and-mortar locations.
In a statement, the company said it has already begun the closing and liquidation process as it “lacks sufficient liquidity” to continue operations. (It owns 281 stores across 30 states.)
“The combined effects of a challenging retail environment coupled with the impact of the coronavirus pandemic have caused significant financial distress on our business,” said CEO and CFO Hunt Hawkins. “The company has determined that the best strategy to maximize value will be a liquidation of its assets pursuant to an organized going-out-of-business sale.”
Among its largest creditors in the fashion and footwear industry are Michael Kors, to whom it owes $1.27 million; Calvin Klein and Tommy Hilfiger parent PVH Corp., $1.07 million; and Designer Shoe Warehouse, $855,000.
In mid-June, Stein Mart warned the Securities and Exchange Commission that there was “substantial doubt” it would be able to survive over the next year. To preserve liquidity, it furloughed most of its store associates and temporarily laid off many corporate workers, as well as reduced the salaries of its executive team and suspended compensation for its board of directors. It was also in the middle of discussions with vendors and landlords regarding unpaid accounts payable and rent.