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Stein Mart Files For Bankruptcy Protection - Update

steinmart aug13 lt

Stein Mart, Inc. has joined the ever growing list of U.S. retailers who filed for bankruptcy protection amid the ongoing coronavirus (COVID-19) pandemic. The beleaguered off-price retailer filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Middle District of Florida.

Like majority of retailers across the country, Stein Mart has been forced to close stores for months due to the lockdown restrictions amidst the ongoing COVID-19 pandemic, that hurt their sales.

Even before the pandemic outbreak, slowing foot traffic amid the ever-increasing online competition from industry majors and the changing consumer habits had led to many retailers shuttering stores and seeking bankruptcy protection.

J. Crew, J.C. Penney and Neiman Marcus have filed for bankruptcy in recent months.

America's oldest apparel retailer Brooks Brothers and the oldest US department store Lord & Taylor have also filed for Chapter 11 bankruptcy protection. Ascena retail group, inc., which owns Ann Taylor, LOFT, Lane Bryant, and Justice brands, also followed suit.

Hunt Hawkins, CEO of Stein Mart, said, "The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business."

The Company continues to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court. It expects to close a significant portion, if not all, of its brick-and-mortar stores, with the company launching a store closing and liquidation process.

For purposes of conducting liquidation sales at substantially all of the company's stores, Stein Mart has entered into an agreement with Hilco Merchant Resources, LLC, Gordon Brothers Retail Partners, LLC, Great American Group, LLC, Tiger Capital Group, LLC and SB360 Capital Partners, LLC. The agreement is subject to Bankruptcy Court approval.

The company is also evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property.

Stein Mart had temporarily closed all stores on March 19 due to the COVID-19 pandemic. The company then began the staggered reopening of stores from April 23 and all stores were re-opened as of June 15, operating with reduced hours.

In late January, Stein Mart had agreed to be acquired by an affiliate of Kingswood Capital Management, L.P., but the parties mutually agreed to terminate the merger agreement in mid-April.

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