Betsey Johnson will close nearly all of her 63 stores after filing for bankruptcy
20:01 GMT, 27 April 2012
US fashion design house Betsey Johnson LLC has filed for bankruptcy, which will see most of the designer's 63 boutiques close over the next few weeks.
The company, which oversees the freestanding Betsey Johnson stores, womenswear and e-commerce, is also expected to lay off 350 of staff.
Ms Johnson will remain creative director of the brand,
however, and will continue to design for her more moderately priced Betsey Johnson sportswear and accessories labels, which are sold in Macy's.
Shutting up shop: Betsey Johnson will close the bulk of her 63 stores, but will remain creative director of the brand
and will continue to design for her sportswear and accessories labels
The designer, who turns 70 in August,
still plans to have a show during Fashion Week in September and will soon start
shooting a reality show, WWD reported.
Johnson has made the decision with Steve Madden, founder of Steven Madden Ltd, which
took over a $48.8 million loan to the company.
Madden produces some of
the Johnson accessories and licenses out products such as legwear and
The fashion house listed total assets of $21.3 million and total liabilities of $15.4 million at the end of 2011, according to the company's balance sheet that was filed with a U.S. bankruptcy court in New York.
Runway reality: The designer
still plans to show during NYFW in September, despite her Betsey Johnson Collection, with dresses retailing for $395, not selling as well as the Betsey Johnson label's dresses for $128
Johnson LLC, which also sells products to department store operators like Nordstrom Inc and Macy's Inc, said it had so far been unable to find new buyers or investors.
In the filing, the company said sales at its retail stores have fallen more than 20per cent and profitability has more than halved since 2007.
'The economic recession had a devastating impact on higher-end fashion apparel brands, including Betsey Johnson Fashions,' the company said, adding that cash constraints had left it unable to turn the situation around.
For the fiscal year ending December 31, 2011, Betsey Johnson generated sales of nearly $60 million, but recorded a negative EBITDA of about $5.7 million.
No sign of retirement: Despite turning 70 this year, the designer continues to cartwheel down the runway at the end of her shows, and will push on with her brand despite the company's bankruptcy
On its corporate website, the company says its namesake owner, known for her bold and over-the-top styles, started the fashion label in 1978 in partnership with former model Chantal Bacon.
The chain sells a mix of rock-n-roll and hippie-themed clothing, cocktail dresses and accessories that are mostly aimed at younger women.
In mid-February 2012, the company engaged Morpheus Capital Advisors LLC to help find new equity investors or sell the business.
Morpheus reached out to 22 potential buyers but was unable to secure a deal, the company said in the filing.
Having failed to find a prospective buyer, Betsey Johnson LLC filed for Chapter 11 bankruptcy protection in an effort to 'maximize the value of its assets for the benefit of creditors,' according to the court filing.