Bebe winds down brick-and-mortar operations
It’s closing time for Bebe — at least, it is for its retail store operations.
The struggling apparel retailer said on Wednesday, June 7, that it has entered into a number of strategic real estate deals that will benefit the company two ways. In addition to shuttering its stores without having to file bankruptcy protection, the company’s brand name and web site will stay in operation — albeit through a new owner.
Bebe reached agreement with substantially all of its retail store landlords to terminate their existing leases. The cost to terminate the leases is estimated to be approximately $65 million.
The fashion retailer also signed an agreement to sell its distribution center in Benicia, California for approximately $22 million. Bebe expects to close the sale of the facility within the next 60 days. The retailer is also actively seeking a buyer for its design center in Los Angeles.
Bebe has also entered into a $35 million loan agreement with GACP Finance CO, LLC, a move that will enable the company to make payments to the retail store landlords pending the closing of the building sales. In addition, Bebe has transferred both the bebe.com URL and its international wholesale agreements into its joint venture with Blue Star Alliance. The venture has executed a royalty agreement with a third party for both operations.
Bebe is also in a Transition Service Agreement (TSA) and Asset Purchase Agreement (APA) with the third party. This firm will provide the sales of certain inventory and bebe.com site management, a move that will enable the company to facilitate the operation of Bebe’s online and wholesale businesses. Going forward, Bebe will collect royalty income through its joint venture, according to the retailer.
The company was advised by its financial advisor B. Riley & Co., a firm that Bebe hired in March to explore strategic alternatives. Like many traditional retailers targeting young women, Bebe blames its struggle on increased competition from Amazon and fast-fashion retailers like H&M.
The more than four-decade-old retailer is the latest mall-based casualty. Earlier this year, The Limited and The Wet Seal also closed all their stores. Most recently, Rue 21 said it would shutter 400 locations.