Sarar USA Inc., a New Jersey-based brick-and-mortar retailer of high-end men's apparel (read: custom-tailored suits) filed for bankruptcy. The company's products are manufactured by Sarar Turkey, a Turkey-based textile company that purportedly produces clothing for the likes of Hugo Boss and Ermenegildo Zegna. Sarar USA currently operates twelve locations; it, until recently, operated eighteen locations but recently closed six locations, including a store on Madison Avenue in New York City. The stores are "primarily in 'Class A' malls (prime locations)."
The company filed for bankruptcy because "its retail sales have not been sufficient to cover its costs, which consist primarily of rent, labor and costs of products." And why is that? Well,
While the Debtor has created a unique high-end customer experience that is valued by its customers, unpredictable industry-wide market challenges in brick-and-mortar retail locations (notably, declining traffic in traditional shopping malls and the inability/lack of willingness by landlords to adjust rents to these operating realities) have led to extremely high operating costs and depressed profits in recent years.
At least they didn't note "the Amazon Effect." Whew.
The company's equityholders were, for some time, propping the company up with liquidity infusions but apparently concluded that they were just flushing money down the toilet. Attempts to negotiate rent concessions from landlords proved futile. The company, therefore, is in Chapter 11 to review its store footprint, close underperforming stores under cover of the Bankruptcy Code, and take a second bite of its landlords to see if they'll be able to squeeze any postpetition rent forgiveness. If the company truly is in Class A malls, well...color us skeptical.
The company, however, seems optimistic. It boasts:
The Debtor’s products are priced from $50-$1,500, with an average retail price (after applicable discounts) of $320. Since its founding, the Debtor has been on a purposeful mission to create high-end tailored suits for the American and Canadian market. The Debtor’s suits are known throughout the world as one of the finest brands available to discriminating consumers. The Debtor offers suits that are both in-style and customer-fitted. Store locations are stocked with an average of 4,500 unique products, across a range of colors to fit any body type. The Debtor has become a leading fashion brand in the United States.
Which would explain why none of us here at PETITION have never heard of it. We've guessing nobody in the restructuring community has either, quite frankly. At least judging by the suits we've seen y'all rocking in court, anyway.
The company also has an e-commerce platform that "currently accounts for approximately 2% of the Debtor's revenues." Expanding that platform is just one part of many in a robust strategic plan the company hopes to initiate in bankruptcy to be viable go-forward. Godspeed.
- Jurisdiction: D. of New Jersey (Judge Sherwood)
- Capital Structure: No secured debt.
- Company Professionals:
- Legal: Perkins Coie LLP (Schuyler Carroll, Jeffrey Vanacore)
- Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
Updated 7/20/18, 6:44 pm CT