BUSINESS OF FASHION: CLOTHING RETAILER, DOTS, FILES FOR CHAPTER 11 BANKRUPTCY
Shadowing the heels of the ever-popular Loehmann’s filing for bankruptcy for the third time earlier last month, fellow discount retailer Dots has followed suit by filing for Chapter 11 Bankruptcy. This raises questions for those in the industry: should more discount fashion retailers be worried? And most importantly, if discount fashion stores are losing popularity, where are consumers shopping?
Dots LLC, operator of 360 clothing chains for young women, files for bankruptcy protection, placing blame on previous management, the economy, and expensive leases. Founded 27 years ago outside Cleveland, Ohio, the company has arranged to borrow US$36 million to help maintain store operations as it reorganizes under court protections. The company is also looking to implement a new merchandising strategy.
Dots says in its Chapter 11 filing that the company is running low on cash. Back in October, vendors began demanding pay for new goods faster than Dots could afford, “causing significant liquidity challenges,” said CEO Lisa Rhodes.
The company which currently employs roughly 3,500 people, says it plans to seek court permission to cancel some store leases. The chain has reported 36 stores that are “chronically under performing,” partly because of their leases or location.
In an effort to turn the company around, Dots is now looking to bring traditional customers back and seek new investors to keep the company afloat. We can only hope that these new investors will implement improved strategies and appoint experienced management professionals that will help the company gain momentum in an extremely competitive market.
Teens, not to worry: some discount clothing retailers may be under performing; however, alternative affordable fashion stores such as H&M and Forever 21 will forever remain among the top performers in the industry.
Text reference via Bloomgberg News