Bebe to close 21 stores, pay $9m in overhaul operation
Bebe is making good on its plan to shutter stores. The retailer on March 28 committed to the closing of 21 retail locations, in an effort to restructure its business without filing for Chapter 11 bankruptcy.
Though Bebe is reducing its physical store count to reduce costs and return to profitability, it will incur a cost for closing the retail locations. According to an SEC filing signed on April 4, Bebe will incur a $2 million impairment charge related to the closed stores, and it will make a $7.4 million termination payment to the landlord. In addition, Bebe is exploring options for its remaining stores.
The retailer said in March that it would shut down all of its stores to operate as an e-commerce entity, beginning with 25 brick-and-mortar locations. For Bebe’s plan to work, landlords would have to be open to lease negotiations, and if the landlords were unwilling, then Bebe would have to explore bankruptcy options.
The California-based company is following a similar strategy to BCBG, which is also shutting down stores to operate online only. BCBG, after announcing its new business strategy, filed for Chapter 11 bankruptcy protection two months later. If Bebe follows suit, then it will have the same fate as Payless ShoeSource, which filed for bankruptcy on Tuesday and announced it will close 400 stores to restructure its business.
Bebe is working with a real estate advisor for lease negotiations and with B. Riley & Co. on strategic alternatives for the company.
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