David's Bridal declares bankruptcy, will lay off more than 9,000 workers
David's Bridal filed for bankruptcy on Monday just days after announcing plans to lay off more than 9,000 workers nationwide later this year.
The popular wedding dress retailer said its stores and e-commerce website will remain open during the financial restructuring process. David's Bridal executives said they are trying to arrange a sale of the company. The Pennsylvania-based company, which filed for Chapter 11 bankruptcy protection, has $257 million in debt, according to court documents.
"We have successfully modernized our marketing and customer interaction processes and driven our retail service levels to best in class," CEO James Marcum said in a statement. "Nonetheless, our business continues to be challenged by the post-COVID environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward."
Founded in 1950, David's Bridal sells mostly wedding dresses and prom gowns across 294 stores in the U.S., Canada and the United Kingdom. In court documents, David's Bridal said roughly 1-in-4 U.S. brides got their wedding gown from the company and nearly 90% of brides visited the store's website at least once during their wedding planning.
David's Bridal plans to lay off 9,236 employees in three waves between April and August, according to a notice posted Friday on Pennsylvania's Department of Labor. As of April, the company had about 10,000 employees — 2,000 full-time and 8,000 part-time. The company said in a statement Monday that some layoffs have already begun.
"We made the difficult decision to reduce our corporate workforce last week in line with market realities and our go-forward approach," David's Bridal said. "This reduction did not impact store employees."
Marcum said in court documents that about a half dozen reasons contributed to why David's Bridal has to file for Chapter 11 — one of which is that couples are increasingly wearing less formal clothing at their weddings.
2018 bankruptcy
The company filed for Chapter 11 bankruptcy in November 2018 seeking to shed $400 million in debt. The company exited bankruptcy in January 2019, just in time to start its busy season. Marcum said peak-selling season runs between January and May every year, but fewer customers bought gowns in the 2019 season because the company's bankruptcy the year prior eroded customers' confidence.
Even though more people are getting married post-pandemic "this hasn't translated into success for David's Bridal as brides continue to migrate to other retailers for their needs," Neil Saunders, managing director at GlobalData Retail, said Monday. The higher cost of living couples face these days is pushing them to secondhand stores for dresses and "unfortunately, David's Bridal has a lot of costs to cover and current demand simply wasn't bringing in enough to pay the bills," Saunders said.
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Aside from David's Bridal, the U.S. retail industry is showing signs of a rough patch. Party City, Serta Simmons and Tuesday Morning have filed for bankruptcy so far this year.
Elsewhere, Best Buy will soon lay off hundreds of in-store workers who specialize in selling computers and smartphones, the Wall Street Journal reported last week. Disney is in the midst of laying off 7,000 workers while Walmart plans to close 19 locations this year — mostly in major cities like Atlanta, Chicago and Portland.
Likewise, Bed Bath & Beyond said it plans to close nearly 240 stores this year as part of a larger effort to avoid bankruptcy. Analysts at UBS expect retailers to close roughly 50,000 stores in the next five years due to the ever-growing prominence of online shopping; increased borrowing costs and customers tightening their wallets due to inflation.