Lord & Taylor goes bankrupt: Will Macy’s and Walmart follow oldest US department store chain?

Known for their expensive fashion and elaborate holiday window displays, the store Lord & Taylor has filed for bankruptcy protection from creditors after a turnaround effort faltered amid the coronavirus pandemic, according to Bloomberg. It is one of the oldest US department stores and filed for Chapter 11 protection in Richmond, Virginia, on August 2 and will submit a reorganization plan with the court. It was founded in Manhattan by two English immigrants in 1826, and according to the report, it is said in a debt of $137.9M.

The owners — fashion start-up Le Tote Inc. — filed for Chapter 11 along with the retail chain. Le Tote bought the rights to the company’s stores, brand and e-commerce site from Fifth Avenue owner Hudson’s Bay Co. for $71M last year. It has about 38 stores and 651 employees and it has now joined an increasing list of department store casualties due to the pandemic.

The chain had closed all of its stores temporarily in March as lockdown was announced to contain the spread of the virus. According to the report, executives at Le Tote have planned to cut the number of Lord & Taylor stores and target younger women with luxury try-on studios, beauty subscriptions and rental drop-off points. In the deal with Hudson’s Bay, the seller had agreed to cover Lord & Taylor’s rent for three years, saving Le Tote $58M annually. On August 2, in a court filing, Le Tote said that its companies reported revenue of about $253.5M in 2019.

Twitter was abuzz with reactions. One said, “Soon it will be Wal-Mart and Target I guess. And stores for rich folk. Which is probably the way things really are in this country—percentage wise, a few rich folk & the rest divided between those who can afford full price at Target & those who need sale & clearance at Target.”

Another said, “Honestly, they lost me a few years ago due to pathetic customer service. In my area, there are other high end department stores, who care more about how the customer feels. To clarify, COVID may not be the reason they had to file. Sorry, not sorry.”

Some remembered, “WOW, my Grandfather was recruited out of Sax 5th Ave. By Stanely Marcus when Neiman Marcus was first getting going. Some fine suits when I was a kid.  We’d go the day after X-mas for the sale and we still got the employee discount on top of the sale price. They are bankrupt too.”

Another wrote: “I have been expecting this since 2008. More ppl are earning a pittance while paying outrageous costs for health care. Amazon plays a role, but IMO, concentrating wealth w/so few eventually had to impact higher-end retail. @GOP, ya’ need a middle class.”

One user hoped, “Worked there for 3-4 years in the late 90’s. Man, were we busy, that shoe department was total chaos. My daughter was the beneficiary of some great children’s dept markdowns. Hope they reorganize.”

Some even wondered about the future of Macy’s. One wrote: “Macy’s has been on the roops for at least three years. It shuttered the Seattle flagship store at Third & Pine last year, in addition to several locations throughout the Seattle area.”

According to Reuters, big names that already filed for Chapter 11 include J Crew Group, JC Penney and Neiman Marcus in May, while Lucky Brand became a casualty of the pandemic in July. According to a report by The Motley Fool, big chains such as Macy’s and Nordstrom have figured their wat around building e-commerce channels to function parallely with their traditional stores, however, they still have to bear the huge real estate costs. According to the report, apparently Macy’s comparable-store sales have declined in the last few years. The major reason behind it is the ever-growing demand for online shopping.

However, according to a recent report by Longview News Journal, the recent shipping delays along with items being out-of-stock by e-commerce giant Amazon, online shoppers have turned to their old ways of shopping which include Walmart and Target, whose networks took advantage of the situation and proved efficiency in picking up and shipping e-commerce purchases quickly.

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