Yet an­other US teen re­tailer ‘Pa­paya' files for Bank­ruptcy

Apparel Online - - Retail Current -

Pa­paya Cloth­ing, owned by Cor­ner­stone Ap­parel Inc., has be­come the lat­est teen fash­ion re­tailer to file for bank­ruptcy pro­tec­tion in the US. It has now joined the list of the other 11 mall-based chain stores such as Amer­i­can Ap­parel, Wet Seal, Sports Au­thor­ity and PACSUN that went bank­rupt in the first half of 2017.

The com­pany, which ex­panded rapidly and opened around

50 of its 80 stores in the last six years, found it­self with in­ad­e­quate funds to ad­dress all of its fi­nan­cial obli­ga­tions.

“The ex­pan­sion ef­forts took a heavy fi­nan­cial toll on the re­tail busi­ness op­er­a­tions of Pa­paya as it racked up con­struc­tion and oper­at­ing costs,” re­port­edly said Tae Yi, Pres­i­dent and Chief Fi­nan­cial Of­fi­cer of the com­pany. In ad­di­tion, the dwin­dling store sales, as an out­come of a gen­eral in­dus­try-wide switch in con­sumer buy­ing pref­er­ences – from ‘in­store’ to ‘on­line shop­ping’ and the in­creased com­pe­ti­tion from the e-com­merce sec­tor – forced the fash­ion com­pany to file for bank­ruptcy. It is per­ti­nent to men­tion here that Pa­paya fetched more than

US $ 134 mil­lion in sales last year and is ea­ger to op­er­ate as a re­tail com­pany in­stead of us­ing bank­ruptcy (pro­tec­tion) to be­come a whole­sale ap­parel com­pany or an in­tel­lec­tual prop­erty li­cen­sor, the me­dia re­ports claim. It has al­ready closed 22 of its op­er­a­tional stores and fur­ther seeks sup­port from the court to exit ten­an­cies for 8 more stores. The shut­ting of stores will also lead to job loss of around 1,300 em­ploy­ees, who are cur­rently em­ployed at Pa­paya.

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