In the early 2000s, Aeropostale was one of the most popular retailers for teen clothing in the United States. However, things have turned around in the last few years, and they have decided to file for bankruptcy.
Aeropostale has not been profitable in some time. Reports show that they've spent the last 13 quarters —- a bit over three years -— losing money. Essentially, going without a profit since 2012 has been too much to bear.
The company wants to become financially stable again; a statement said that is the goal of the bankruptcy filing. They are not closing their doors entirely at this time. They're changing things up, closing stores, and trying to get to a place where they can make money. It may not be 2003 anymore, but they think they can turn a profit if the right steps are taken.
Assets and Store Closings
The closings will impact a good amount of jobs in North America. At this time -— these things can change as the case goes forward, as was recently seen with the closing of Sports Authority stores -— they're planning to shut down 113 stores across the United States. On top of that, they will shutter 41 more stores in Canada.
Aeropostale isn't in too deep, as their debts do not exceed $40 million: According to the Chapter 11 bankruptcy filing, they have $390 million in debts and $354 million in assets. The company also claimed that it had been given $160 million from Crystal Financial LLC that can be used for financing going forward.
When to File
In some situations, the only way for a company to get out of debt is to break the whole thing down, declare bankruptcy, and find a strategy that makes money. It's a drastic step, but can eventually lead to both profitability and stability for the long run. A company does not have to close completely, especially when it has some name recognition, on account of debt alone.
Those who are interested in using bankruptcy should take the time to learn about the different
types of bankruptcy that may be available.
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