Sign of the times? Loehmann’s Files for Bankruptcy

Racks at Loehmann’s Orange County store.

When I started this website 5 years ago, Loehmann’s was one of The Recessionista‘s budget fashion “go to” stores.  So, its sad to read today that the 92 year old New York based company has filed for Bankruptcy under Chapter 11 and will be liquidating its holdings.  According to court filings, the company has elected to do “a wind-down and liquidation process” in which the company will seek to sell its assets/inventory  at an auction on December 30, 2013.  Has the Internet age and all the budget designer collections from H&M, Target and most recently Lane Bryant bought about the demise of the brick and mortar, cum online,  fashion discounter?

Our local Loehmann’s store in Hawthorne/ Los Angeles has already liquidated their inventory.   I would expect deep discounts at the Orange county , Beverly Hills and New York Loehmann’s stores for Christmas shoppers followed by the liquidation sale after Christmas.

What caused the bankruptcy filing at this time? An over saturated retail market for discount fashion with everyone from Walmart to Target to TJ Maxx/Marshalls and H&M, plus online shopping clubs, taking a piece of the Loehmann’s pie.  Loehmann’s Chairman Michael Appel said “increased competition in the off-price retail channel, coupled with limited access to capital, has severely impacted the company’s financial position.”

Looking at the 40% sale going on now at Loehmann’s online, it appears to be business as usual for the retailer.   There’s always a chance that they will reorganize as Spiegel and other companies have done after declaring bankruptcy.  But some experts think a reorganization may not be feasible in the current market.

“The basis of their existence is to compare themselves to regular stores,” said Howard Davidowitz, a retail consultant at Davidowitz & Associates in Manhattan, in a phone interview with Reuters. “But if regular stores are selling products at the same or lower prices, they’re done. We are in the most promotional holiday season in 20 years. That’s what Loehmann’s ran into, and that’s why they filed now.”