Dots announced today that it has filed for bankruptcy protection, citing prior management shortfalls, a rough economy and expensive store leases. The company will be closing 30 of its 400 store locations in an effort to shed assets and other expenses.
The 27-year-old retailer has arranged to borrow $36 million to keep operating under court protection while it shifts its merchandising strategy and reorganizes, according to a statement. A sale of "some or all" of the business is also possible, according to the company.
"The filing is the best option available to restructure certain operations, preserve the business as a going concern and maximize the value of the enterprise by pursuing a sale," said Dots' CEO Lisa Rhodes. "We are in the process of turning the business around, and the filing is another step toward doing that."
Dots said in its Chapter 11 filing in Newark, New Jersey, that it is running low on cash and unable to pay many of its debts. In October, vendors began demanding Dots pay for merchandise which the company could afford, "causing significant liquidity challenges," according to the court affidavit filed yesterday.
Dots, based in Glenwillow, Ohio, reported $293.7 million in sales for the 12 months ending Jan. 31. That's down from $338.8 million in the previous 12 months and $346.2 million the year before that.
The retailer is the second to cite severe financial challenges this year behind Loehmann's which filed for bankruptcy in December and is going out of business.
For more see:
-This Reuters article
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