Belk Inc., the department store chain that has been a mainstay for Charleston buyers for nearly a century, said it will file for bankruptcy to cut $ 450 million in debt, following names like JC Penney, Neiman Marcus and other networks in difficulty.
The retailer, which the founding family sold for $ 3 billion to a private equity firm about five years ago, said on Tuesday that it hopes to exit the reorganization quickly, by the end of February.
Belk will continue with “normal operations” as it goes through the process. No store closings or job cuts were announced.
Numerous media reports about the likelihood of a bankruptcy have been circulating in recent weeks.
New York-based Sycamore Partners said it hopes to retain majority control of Belk under the so-called pre-defined agreement it has signed with most of the retailer’s creditors and creditors. Investment giants KKR and Blackstone will have minority stakes in the network after the financial restructuring.
“As the continuing effects of the pandemic have continued, we have been evaluating potential options to protect our future,” said Belk CEO Lisa Harper in a written statement. “We are confident that this agreement puts us on the right long-term path to significantly reduce our debt and provide us with greater financial flexibility to meet our obligations and continue to invest in our business.”
Suppliers will continue to be paid. In addition, a new injection of $ 225 million in capital “should support Belk’s continued investment in strategic initiatives,” including its online sales channels and product selection in the home, outdoor and wellness categories. be
The Charlotte-based chain employs more than 20,000 workers in its nearly 300 stores in 16 southeastern states, including four in the Charleston region and others across South Carolina.
Founded in 1888 by William Henry Belk, the company has sold clothing and other products in the Holy City since 1926, when Belk-Robinson Co. opened its doors at 232 King St. The chain now has four department stores in the Citadel Mall in the west Ashley, Northwoods Mall in North Charleston, North Main Market in Summerville and Mount Pleasant Towne Center.
Three generations of the Belk family managed the business until they and other shareholders decided to sell it to Sycamore in 2015, saying at the time that the business would guarantee the “future of the network in our increasingly competitive and changing landscape”.
The purchase left the company with more than $ 2 billion in debt, while department stores were losing traffic to specialty stores and online sites. The industry’s problems worsened last year, when the COVID-19 crisis forced many traditional retailers to close for weeks, hampered clothing sales and discouraged infection-averse shoppers from attending shopping malls.
Belk laid off workers in March when the pandemic struck and cut senior employees’ wages by up to 50 percent during temporary store closures. It also eliminated an undisclosed number of jobs in July, mainly at its headquarters.
The company’s planned bankruptcy is the first in 2021 involving a major US retailer, after a series of lawsuits last year.
Contact John McDermott at 843-937-5572 or follow him on Twitter at @byjohnmcdermott