Brookstone files for bankruptcy, will close all mall stores
Looks like are going to live to see the day when the internet will kill all malls across the country. As time moves on, shopping online is becoming more and more the way of life.
(USA Today) You may soon have to get your massage chair somewhere else. Specialty goods retailer Brookstone, known for quirky products such as back-kneading chairs or Bluetooth speakers in the shape of footballs, filed for Chapter 11 bankruptcy protection Thursday and plans to close all of its remaining mall stores.
The company hired liquidators to close its about 100 remaining mall locations after declining foot traffic and management blunders crushed sales. The retailer has been bleeding cash as customers increasingly shop online for the types of products it sells, such as high-tech blankets, headphones, travel pillows and exercise equipment.
Brookstone, which is owned by Chinese conglomerate Sanpower Group, hopes to keep its 35 remaining airport stores open. It’s the second bankruptcy for Brookstone in recent years, giving the company the dubious distinction of what legal insiders call “Chapter 22.” The retailer said it’s seeking a buyer. Without a sale, it could end up liquidating.
Facing mounting losses, Sanpower decided in July to “provide limited funding,” forcing the company into bankruptcy, Brookstone Chief Financial Officer Greg Tribou said in a court filing.
“Today we have taken several important steps to restructure the business and ensure that Brookstone will be well-positioned to succeed for years to come,” Brookstone CEO Piau Phang Foo said in a statement. “The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint.”
The company was sold to its Chinese owner in 2014 after filing for bankruptcy earlier that year. In addition to declining mall traffic, Brookstone also blamed supply chain issues, technical problems and management turnover for its downfall. In one unusual twist, the company said it had lost some vendors after trying to get them to accept Chinese currency, called yuan, instead of dollars. The company said its 2017 sales totaled $351 million, down 33 percent from 2016. E-commerce sales represented about 40 percent of its business.
But a recent e-commerce technology shift caused Brookstone to lose “a substantial amount of data” that ended up “severely damaging” the company’s digital sales, Tribou said.
What’s more, Tribou said Brookstone recently ceased sending out hard-copy catalogs, and that was “directly responsible” for a sharp drop in web traffic.