With two stores in Harlem the New Jersey-based plus-sized fashion retailer Ashley Stewart filed a voluntary petition under Chapter 11 on Monday in Newark that will allow the company to file for bankruptcy and restructure its financials.
Ashley Stewart said it will work with stakeholders to implement a restructuring plan, which could result in a sale of a substantial amount of the company’s assets.
“This filing was a necessary step to get Ashley Stewart positioned on the right path for success,” said Michael Abate, the retailer’s senior vice president of finance in a press release. “Unfortunately this will mean the closing of 27 underperforming stores throughout the country which are not strategically aligned with the going-concern business.”
The company declined requests for further comment.
In 2012, Ashley Stewart’s revenue and profitability declined substantially, although further details were not released by the company. The retailer has 16 stores in New York City, according to a report by the Center for an Urban Future, including the company’s flagship on 125th Street in Harlem which opened in 1999. The chain has been working for six months to pare costs and refocus the company’s merchandizing and e-commerce strategies to better serve customers. The company was founded by a New York real estate developer, who sold it several years ago and severed all contacts.
“[This is] another example of a brand that’s being squeezed between a contracting middle market and the relentless growth of e-commerce,” said Doug Stephens, founder of Retail Prophet, a consultancy specializing in retail and consumer behavior.
One bright spot for the chain is that customer engagement on social media platforms has grown at a rapid pace in all 50 states, as well as 200 overseas markets, through the Ashley Stewart website, according to the company’s release.
Mr. Stephens warned that this trend may be difficult to sustain. “While all apparel is open to consumers shopping online, it could be argued that plus-sized clothing retailers may be particularly vulnerable, given the increased freedom shoppers have of trying clothes on at home,” said Mr. Stephens.
Others, however, suggested that the problems seemed to have far more to do with Ashley Stewart than with its market niche. Broker Peter Ripka, chief executive at the retail brokerage firm Ripco, drew a distinction between Ashley Stewart’s woes and those of other retailers who are facing intense online competition and have announced cutbacks in recent weeks, including Radio Shack and Staples (both stores that are located in Harlem on 125th Street).
“I think the problems that Radio Shack and Staples are having relate more to the Internet and Amazon, whereas Ashley Stewart has been bouncing along for years,” Mr. Ripca said.
He also insisted that the plus-sized category itself remains strong, even for brick-and-mortar chains. Just last year, for example, Mr. Ripka inked a deal on busy West 34th Street for another plus-sized outfit, Lane Bryant. He is in the process of arranging another store for that retailer in Brooklyn (Source).
Photo credit: from a Thick Girls Closet.