Retailer Brookstone announced it has filed for Chapter 11 bankruptcy and will close its 101 mall locations, while keeping its 35 airport stores and its website operational as it seeks a buyer.
The company said it has $30 million in financing to continue operations pending a sale. In its filing it said it had liabilities of up to $500 million and assets of $50 million to $100 million.
“The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint,” CEO Piau Phang Foo said in a statement.
“They’re trapped in hundreds of these B and C malls, whose traffic has been in serial decline,” Mark Cohen, the director of retail studies at Columbia Business School, told CNN Money. “Where they are in triple-A malls, they’re faced with very high rent.”
The mall vacancy rate at metro and regional properties was 8.6% in the first quarter of 2018, the highest since the end of 2012, according to real estate research firm Reis.
Brookstone started in 1965 with an ad in Popular Mechanics for exotic tools. It opened its first retail location in 1973, then moved into malls in 1980. It was taken public in the mid-1990s by Bain Capital, then taken private again in 2005. It is currently owned by Chinese conglomerate Sanpower Group.
The retailer’s CFO, Greg Tribou, said a recent shift in e-commerce technology caused it to lose “a substantial amount of data” that ended up “severely damaging” digital sales.
Tribou said the company also recently stopped sending out hard-copy catalogues, which was “directly responsible” for a decline in internet traffic.
“Brookstone had a unique value proposition,” Sean Maharaj, a director in the retail practice of consultancy firm AArete, told CNN Money. “They had a sophisticated offering. It was more boutique-like and felt a little white glove.”
The bankruptcy filing is the company’s second in four years.