Another popular retailer is declaring bankruptcy and closing stores -- but not all of them -- while it puts itself up for sale. Houston-based Francesca's Holdings Corporation (NASDAQ: FRAN) announced Dec. 3 that it had filed for Chapter 11 bankruptcy protection and secured from its current lender, Tiger Finance, a $25 million debtor-in-possession financing commitment to continue operations and meet its financial obligations while the business is being sold.
Those new commitments include paying the leases to the landlords of the remaining 558 boutiques the company still operates in 45 states and the District of Columbia under the francesca's name as a purveyor of women's casual apparel, jewelry, and accessories.
Francesca's Holdings already had announced plans to close 140 of its stores while it tried to renegotiate a number of leases and that more closures could follow.
Here's what the company said about the sales process: "The company has entered into a Letter of Intent with TerraMar Capital, an investment firm that provides debt and equity capital to middle-market businesses, for TerraMar or an affiliate to become the stalking horse bidder for the auction and sale process. The Letter of Intent is subject to customary conditions, including execution of a definitive asset purchase agreement, and contemplates the purchase of Francesca's business as a going concern."
A growing list of shutdowns and fire sales
Francesca's Holdings joins a growing list of retailers that have gone bankrupt during the coronavirus pandemic. Some have been sold and remained open, such as J.C. Penney to mall operators Brookfield Property (NASDAQ: BPY) and Simon Property Group (NYSE: SPG). Others, like Stein Mart, have flat out shut down and liquidated.
And then there was the recent sale by the Ascena Group (OTCMKTS: ASNAQ) of its Ann Taylor, Loft, Lane Bryant, and other brands to Sycamore Partners. That private equity firm -- which already owns The Limited, Staples, and Talbots -- has committed to keeping a lot of those stores open.
That's good news for the people who work in those stores, the customers who shop in them, and the property owners who host them.
The Millionacres bottom line
Perhaps francesca's can go the same route. If they can hang in there, and maybe get a booster shot from the holiday season while a coronavirus vaccine makes its way through the population, these stores seem well-positioned to rebound with the rest of the economy, given their popularity and good locations.
For instance, here in South Carolina, the company has stores on tony King Street in downtown Charleston, popular Columbia Centre mall in Columbia, and in Greenville, Hilton Head Island, Mount Pleasant, Myrtle Beach, North Charleston, and North Myrtle Beach.
The stores are in a mix of malls and shopping centers. No property owner wants to lose tenants. And while francesca's, like many others, sells its wares online, appealing boutiques like these may prove to be a bellwether on how well physical retail, and commercial real estate itself, can ultimately weather the devastating storm that is the novel coronavirus.