More on the Dying Retail Sector: The Bankruptcy of Coldwater Creek

I very much doubt that any of you have ever been to a Coldwater Creek. It pains me to say that I have, many times. It is my grandmother’s go-to store and I am her favorite shopping companion. Coldwater Creek specializes in woman’s clothing and focuses on an older clientele (the website says it target customers are “educated woman 45-65”). It isn’t outrageously expensive but it isn’t really cheap either. When I looked on the website, most dresses were going for about $150. Coldwater Creek’s business plan focused largely on its catalogue business and approximately 370 retail stores but it also sells clothes through its website.

Like much of the retail sector, Coldwater Creek began during the economic downturn. In fact, the company has not been profitable since 2007 (that’s a long time). However, the nail in the bankruptcy coffin came when it posted dreary holiday sales.

Coldwater Creek has about $353 million in total debt. That number is significantly larger than some of the other retail bankruptcies that we have discussed so far on the blog. For instance, according to Sam’s post, Brookstone had only $140 million in total debt when it first considered filing for Chapter 11 in February.  Coldwater Creek listed also listed $180 million in current liabilities and $6.8 million in cash.

Coldwater Creek’s bankruptcy announcement comes 5 months after it announced hat it was exploring alternatives to try and stave off filing. Coldwater Creek considered putting the company up for sale and was trying to court various private equity buyers.

Early reports suggest that the company will seek to liquidate its assets rather than continue to run the business during bankruptcy.  That means that Coldwater Creek may file for Chapter 7, instead of a Chapter 11 reorganization. The fact that the company has elected to liquidate suggests that the business is not worth more as a going concern.

Again, like Brookstone and Sbarro, Coldwater Creek seems to be the latest victim as the result of dwindling mall traffic and increased Internet shopping. 

Here is the WSJ blog post: http://online.wsj.com/news/articles/SB10001424052702304157204579473421239410210