High-end kitchenware retailer Sur La Table has filed for bankruptcy with a plan to close nearly half of its stores and consummate a sale to private-equity firm Fortress Investment Group.
The Chapter 11 filing came two weeks after Sur La Table, which also offers cooking classes at many of its stores, said it would lay off dozens of corporate employees and might close five retail locations.
While, according to court papers, the company had been considering a liquidation of its assets, it now believes it can continue operating with fewer stores and the sale to “stalking horse” bidder Fortress, which has agreed to assume the leases for up to 70 of Sur La Table’s 126 locations.
“This sale process will result in a revitalized Sur La Table, positioned to thrive in a post COVID-19 retail environment,” CEO Jason Goldberger said in a news release. “Sur La Table will have a balance sheet and retail footprint optimized to position the company for a bright future that continues our nearly 50-year tradition of offering high-quality cooking products and experiences to our customers.”
As of July 4, all but five of Sur La Table’s had reopened after being shut down due to the COVID-19 pandemic.
Although the company’s e-commerce business recorded record revenues during the shutdown, those sales were “nowhere near sufficient” to offset its fixed real estate lease expense of approximately $4 million per month, much less make up margins on sales from the brick-and-mortar stores, Goldberger said in a court declaration.
As the Seattle Times reports, Sur La Table, which started out as a single store in Seattle’s Pike Place Market, has been “hammered both by the pandemic and the broader pressures on bricks-and-mortar retail,” including competition from online retailers.
Sales at its stores reached more than $230 million in 2018 while e-commerce generated more than $80 million but according to Goldberger, the company has been weighed down by “a store footprint that is disproportionate to market demands” and the substantial capital costs involved in installing commercial quality kitchen spaces for its cooking classes and implementing a comprehensive e-commerce sales strategy.
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