David’s Bridal filed for bankruptcy protection Monday, hoping to keep its doors open as it grapples with an avalanche of debt and disruption in the bridal industry.
The nation’s biggest bridal retailer, which has been in turmoil for years, said in a statement that the restructuring deal will shave $400 million off its $750 million debt and allow it to continue operating its 300 or so U.S. stores, promising that “orders will arrive on time and bridal appointments will not be impacted.”
“For more than 60 years, David’s has delivered beautiful, high-quality dresses and accessories for our customers’ most special occasions, and the actions we are taking will enable us to build on that tradition,” chief executive Scott Key said in a statement. “Our team is laser focused on providing brides and their families with the five-star service and experience they deserve and have come to expect from us.”
Since it was acquired in 2012 by private-equity firm Clayton, Dubilier & Rice for more than $1 billion, the Conshohocken, Pa.-based company’s finances have steadily declined. Teamsters and consumer activists warned of the company’s failures when they protested at the 2016 Great Bridal Expo, and rumors of bankruptcy solidified after David’s missed a major debt payment last month.
David’s Bridal has struggled to keep up with seismic shifts in the bridal industry: a boom of online bridal retailers, and a trend toward couples marrying later and consumers spending less on weddings. Similar struggles caused its cohort, Alfred Angelo, to close 10 stores without warning in July 2017 and file for bankruptcy.
“Although its bridal products are diverse, the company competes within a small niche of the retail industry and has limited product diversity compared to large, global retailers,” Moody’s analysts wrote in a credit report after the bankruptcy news was announced. “The company is therefore dependent on trends in wedding volumes and budgets.”
These changing tides are upsetting an already challenging industry that depends on what is typically a one-time interaction with customers whose expectations and emotions run high, said Raya Sokolyanska, a senior analyst with Moody’s Corp. David’s Bridal straddled price points in a way that further complicated its business proposition. While its offerings range from under $100 to around $2,000, the bulk of its business comes from dresses priced $600 and less.
“Even though they do sell some premium and mid-price-point dresses, their core business has essentially been the Walmart of wedding gowns,” Sokolyanska said. “They’ve had to balance selling to different customers that have different needs.”
They were also slow to adapt to the “casualization” trend in weddings, according to S&P Global Ratings analyst Mathew Christy, an evolution that has seen the standard white gown replaced by more-informal dresses that might be worn on other occasions.
“As brides are looking to either pare back their wedding expenses or spend less on gowns, that has led to a decline in spending on wedding dresses or destination weddings and having smaller weddings,” Christy told USA Today.
The departure from traditional wedding styles has also spawned a wave of wedding lines at non-bridal retailers, such as H&M and online apparel company Reformation. David’s Bridal also has to compete with companies such as BHLDN, Anthropologie’s sister brand, that offer more-contemporary wedding gowns at a higher price point.
This year, the company has made some effort to evolve by offering one-on-one appointments, increasing its social media presence and expanding its selection of lower-priced dresses.
David’s still captures a big portion of the American bridal market, selling about a third of U.S. wedding dresses each year, according to market research firm IBISWorld. If it is able to steady itself through restructuring and keep modernizing, Sokolyanska said, it could very well weather the storm.
“There is brand recognition and market share there that should allow the company to continue operating,” Sokolyanska said. “I don’t think they’ll go back to the levels of profitability they had a few years ago, but at least they can defend what they have.”
Original article found on Washington Post