Gordman Stores Inc., an Omaha-based Midwestern department store chain founded in 1915 and operating from more than 100 locations in 22 states of the United States, is on the verge of filing for bankruptcy, according to individuals familiar with the company’s situation.
The people who revealed the internal news asked to be anonymous as the process isn’t made public yet. The filing could come by the end of this month. The shares of Gordman had repeatedly been falling with over 75 percent plunge in the year 2016, after battering severe losses in the last five quarters out of six.
The store chain had reported falling in their sales from past few years. They would become the latest victim in the retail industry affected by the luxury of malls and comfort shopping through the internet. The shift had its adverse effect on the department stores with their loyal customers moving to different retailers.
Several other companies such as Macy’s Inc., J.C. Penny Co., and Sears Holding Corp. are also closing hundreds of stores to cope up with their losses. Several companies have already filed for bankruptcy owing to sluggish demands, including Aeropostale, American Apparel and Sports Authority, Wet Seal, and Vanity.
Gordman Inc. recruited Andy Hall as the new Chief Executive and President in 2014, replacing Jeff Gordman. The company witnessed some improvements under Hall. He added new merchandise to different locations, launched a cost-cutting scheme, stopped excessive use of coupons, and made attempts to increase their production. The company responded well, and the sale records were good until 2015. It started stagnating after 2016.
The retailer has a debt of $85 million, and much of it is due in 2020. Gordman’s stocks plunged below $1 in Sept 2016. Nasdaq market issued Gordman Inc. a “deficiency letter,” saying that if at all the stock doesn’t increase above $1 for each share requirements by May 1, then they’ll be delisted from the exchange board.
In Jan, the company had laid off many employees from their Aksarben Village stores. The store employed 350 people previously before the lay-off. The company didn’t reveal the exact numbers of the employees that they had to lay off; however, they blamed the “current sluggish retail environment” as the main reason.
If Gordman files for bankruptcy, they’ll still have a debt of $85 million. They’ll have to either sell their brand to a bigger company or reorganize their assets by selling few of their stores from favorite locations.
The shares of Gordman have dropped nearly 72 percent and are trading at 17 cents per share after Bloomberg reported they might file for bankruptcy. This is by far their biggest drop in stock by about 93 percent.