Retailer Body Central ponders a Chapter 11 filing
January 7, 2015 12:53 PM
Body Central Corp., a young women’s fashion retailer is exploring options to counter liquidity problems, the company said today.
Potential alternatives include a Chapter 11 bankruptcy filing or an insolvency proceeding, says Body Central, No. 384 in the Internet Retailer 2014 Top 500 Guide.
On Tuesday the company received a notice of default from the holders of Body Central’s outstanding $18.0 million in secured convertible notes issued June 27, 2014. Such a default could also result in a default under the company's senior credit facility.
“While the company has made significant reductions in expenses and reduced excess inventory levels, our top line remains challenged by both the overall market environment and the transition time required to complete the merchandise transformation that began in the latter half of 2014,” says Ben Rosenfeld, president and CEO. “The management team and board, along with its advisors will continue to evaluate all available alternatives that may be appropriate for the business.”
The Company has not identified a timetable for completing its review of alternatives and says it won’t disclose new developments until its board of directors approves a specific action, or has concluded the review.
For the third quarter ended Sept. 27, Body Central reported:
- Direct sales, including web and catalog, of $1.9 million, down by about 63% from $5.1 million in the third quarter of 2013.
- Total sales of $43.4 million, a 28.6% decrease from $60.8 million.
- Comparable-store sales decreased 23.1%.
- Net loss of $16.7 million, compared with a net loss of $9.0 million in the third quarter of 2013.
For the first nine months of fiscal 2014, the company reported:
- Total sales of $159.6 million, down by nearly 27% from $217.4 million in the same period of 2013.
- Net loss of $47.0 million, compared with a net loss of $19.1 million in the first nine months of 2013.
Body Central did not break out direct sales or comparable-store sales for the first three quarters of 2013.
Body Central operates 265 specialty apparel stores in 28 states under the Body Central and Body Shop banners, a Body Central catalog and an e-commerce site, BodyCentral.com.