True Religion Files For Bankruptcy
A once highly praised brand now in a mountain of debt.
On Wednesday, July 5 U.S. denim retailer True Religion Apparel Inc announced it has filed for bankruptcy protection and signed a restructuring agreement with a majority of its lenders.
True Religion, a company who has slowly been falling out of style, asked for a chance to reinvent itself as it grapples with hundreds of millions of dollars worth of debt and declining sales, according to court documents.
True Religion listed assets and liabilities in the range of $100 million to $500 million. On the bright side, True Religion said in a press release that the company has already secured a deal with its creditors who will reduce the debt load by $350 million. In exchange, the company’s biggest creditors will receive large ownership stakes in the company.
“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand, and position the company for future growth and success,” True Religion Chief Executive John Ermatinger said in a statement. In order to improve its outlook and save money, the company plans to “close or consolidate underperforming store locations and renegotiate lease terms” as well as “invest in growing our digital footprint,” says Ermatinger. 27 stores have already closed – a number that will continue to grow if the company’s plans to restructure its operations don’t go as planned.
True Religion made its debut in the fashion industry before online apparel sales were common. The company was founded in Los Angeles in 2002 and rose to popularity as designer jeans became a highly coveted phenomenon. Unfortunately today, True Religion’s brand has fallen through the cracks, and the company’s sales have been in decline for years.
Ilse Metchek, president of the California Fashion Assn. trade group, said there continues to be a market for expensive denim but unfortunately True Religion struggled with marketing and merchandising shortcomings. “Their retail establishments were not exciting enough, and they weren’t putting enough marketing energy behind their brand to bring them to an aspirational level,” she said.
Bankruptcy protection and restructuring was the next step. True Religion’s chief financial officer, Dalibor Snyder, says if the plan is successful, True Religion will reduce its debt load by 72%.