Luxury fashion retailers suffered serious effects of the Covid-19 pandemic as social distancing and stay-at-home rules prevented large gatherings for weddings, ceremonies, banquets, and other formal events.
Other economic problems also contributed to luxury fashion retailer financial distress, including increased labor and product costs driven by inflation and rising interest rates.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💵
Huge formal apparel retailer David’s Bridal was a victim of the lingering effects of the pandemic and filed for Chapter 11 protection for a second time in five years in April 2023 to sell its assets and remain in business.
Related: Huge burger chain franchisee files for Chapter 11 bankruptcy
The U.S. affiliate of the Paris-based luxury boutique chain Anne Fontaine on Jan. 16, 2024, filed for Chapter 11 Subchapter V bankruptcy protection in the Southern District of New York to reorganize, as the company was not able to recover from financial distress caused by the Covid-19 pandemic.
Anne Fontaine operated 17 luxury boutique locations in the U.S., 19 in Europe, three in the Middle East, and three in Asia, according to its website.
High-end apparel retailer closes stores
High-end apparel chain Ted Baker Canada, which operated 31 Ted Baker stores in the U.S. and 25 in Canada, along with eight Brooks Brothers Canada shops, and seven Lucky Brand Canada stores, a year later in April 2024 filed to restructure under Canada’s Companies’ Creditors Arrangement Act and for Chapter 15 bankruptcy to liquidate and close all of the North American stores.
Sometimes, a retailer has to deal with legal issues that push it into bankruptcy.
Luxury fashion retailer McMullen on Aug. 21, 2024, filed for Chapter 11 protection in the Northern District of California, reportedly facing a lawsuit filed by online competitor Moda Operandi over alleged copyright infringement.
The debtor filed its petition about two weeks after luxury fashion retailer Moda Operandi filed a lawsuit against McMullen in the Northern District of California alleging copyright infringement for using copyrighted product photos without the retailer’s consent.
The Haute Couture Archive of Ralph & Russo at Bonhams auction house in London. (Photo by Eamonn M. McCormack/Getty Images)
Eamonn M. McCormack/Getty Images
Ralph & Russo may file for bankruptcy
Finally, London-based luxury fashion brand Ralph & Russo is just steps away from filing for insolvency, which often leads to bankruptcy in the UK, The Times reported.
Related: Another huge auto parts brand files for Chapter 11 bankruptcy
Ralph & Russo is facing its second insolvency filing in three years after filing its intention to appoint administrators on April 14. The high-end fashion retailer’s filing gives the company protection from creditor claims for 10 days and is considered a precursor to a full insolvency.
More bankruptcies:
Popular restaurant and bar chain files for Chapter 11 bankruptcyPopular athletic shoe chain files for Chapter 11 bankruptcyAward-winning cosmetics brand files for Chapter 11 bankruptcy
The fashion company was hit hard during the Covid-19 pandemic and appointed administrators to handle its first insolvency in March 2021, which led to bankruptcy. The company considered liquidating luxury gowns at several locations but instead negotiated a sale of its assets to U.S. entrepreneurs Tai Lopez and Alex Mehr of Retail Ecommerce Ventures for £3.5 million ($4.63 million.)
Lopez and Mehr had previously purchased bankrupt U.S. brands, including Dressbarn and Radio Shack. The company’s financial distress continued, and it hired restructuring law firm Kirkland & Ellis in March 2023
Ralph & Russo was founded in 2010 by Tamara Ralph and Michael Russo and became a favorite brand among A-list celebrities and wealthy clientele. Actor Angelina Jolie wore a Ralph & Russo dress at the European premiere of Disney’s “Maleficent: Mistress of Evil” in 2019.
The luxury fashion house offers apparel, bridal couture, shoes, handbags, and accessories.
The haute couture retailer operates seven retail boutiques worldwide at London Harrods, Paris Maison, Doha, Monte Carlo, Dubai, Miami, and New York. Consumers can register for an appointment online for its boutique locations, and the company’s London Maison location is by appointment only.
Related: Popular breakfast chain franchise files for Chapter 11 bankruptcy
