John Varvatos files for Chapter 11 bankruptcy protection

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May-20-20, 12:19 PM
Lowell

John Varvatos files for Chapter 11 bankruptcy protection
Saddened to report this, a step back for the budding downtown retail district. Apparently another retail victim of Covid19 Crisis but it appears also to have had large debt.
- Retailer cites $140 million in debt and other obligations
- Metro Detroit native opened Detroit location in 2015, thought of as key moment for downtown retail
- Majority owner plans to purchase company and assets outright
Quote:

John Varvatos Enterprises Inc., the high-end clothier whose Detroit store opening five years ago was heralded as a new chapter for the downtown retail scene, filed for Chapter 11 bankruptcy protection in Delaware earlier this month, citing the COVID-19 pandemic as the key driving factor after slumping financial performance in previous years.

The eponymous company founded in 2000 by metro Detroit native John Varvatos has a store at 1500 Woodward Ave. in the central business district, although it has been closed for two months since the outbreak of COVID-19, which has killed more than 5,000 in Michigan and more than 90,000 in the United States.

The filing comes as the menswear chain buckles under the weight of roughly $140 million in debt and other obligations to thousands of creditors, and store closings during the global pandemic constricting its revenue stream.

https://www.crainsdetroit.com/retail...tcy-protection
May-20-20, 12:27 PM
iheartthed
Quote:
Originally Posted by Lowell

Saddened to report this, a step back for the budding downtown retail district. Apparently another retail victim of Covid19 Crisis but it appears also to have had large debt.

Retailer cites $140 million in debt and other obligations
Metro Detroit native opened Detroit location in 2015, thought of as key moment for downtown retail
Majority owner plans to purchase company and assets outright
They filed weeks ago. Why did it take Crain's so long to pick up the story? https://www.bloomberg.com/news/artic...for-bankruptcy
May-20-20, 12:31 PM
CrashDummy

And just for clarification, there is no mention of store closings.
May-20-20, 01:34 PM
401don

I'd like to know how much rent, if any, he was paying before the pandemic. I think this was as much a favor by him and marketing move by Gilbert to have a high end store establish a downtown presence. I doubt the demographics came close to justifying the store.
May-20-20, 01:56 PM
Metro25

Quote:

Originally Posted by 401don

I'd like to know how much rent, if any, he was paying before the pandemic. I think this was as much a favor by him and marketing move by Gilbert to have a high end store establish a downtown presence. I doubt the demographics came close to justifying the store.

lol I would think at this point some of you would stop with these absurd conspiracy theories but alas.
May-20-20, 02:41 PM
Bigdd

^ I thought 401's point was right on.

It was a cool place,.. but it didn't look like it was even trying to be a business.

Cool vintage stereo gear upstairs [[that didn't seem to be for sale).

Some t-shirts and such downstairs,.. but no evidence of anything being sold.

More like a movie set than a store.

Third-man records on Canfield is a bit like that. T-Shirts, some Low priced Rega record players, some belts,.. but you never see anyone buying anything.

I take visitors there. We'll buy some Shinola watches next door, and tour Third Man,.. but no one ever seems to find anything in TM they'd want to buy.
May-20-20, 05:08 PM
iheartthed

Quote:

Originally Posted by 401don

I'd like to know how much rent, if any, he was paying before the pandemic. I think this was as much a favor by him and marketing move by Gilbert to have a high end store establish a downtown presence. I doubt the demographics came close to justifying the store.

Honestly, I hardly ever see people in a John Varvatos store in any city. I constantly pass by both stores in Manhattan and rarely see people inside shopping. Because of that I thought their business model was to use them as showrooms, similar to what Bonobos does. I guess people just weren't buying Varvatos at all, lol.

The Detroit store made sense from a marketing perspective due to Chrysler's Made in Detroit campaign, and the Varvatos edition of the Chrysler 300.
May-20-20, 07:32 PM
EastsideAl

Higher-end menswear is a pretty tough business these days, even before the virus. I also get the sense that Varvatos has gone out of style, and that's the type of mojo that's hard to recapture. But, like so many other companies in recent years, they've also been through the private equity mill and been saddled with a lot of debt. The brand may still have some marketable name value so the private equity majority owner will probably buy that up, but I wouldn't be very hopeful about the survival of most of those stores, especially with the double-whammy of the slow death of retail and Covid. [[disclaimer, I worked with John Varvatos' company on some deals back when his stuff was new, still pretty obscure, and on the leading edge).
May-21-20, 01:02 PM
Metro25

Quote:

Originally Posted by iheartthed

Honestly, I hardly ever see people in a John Varvatos store in any city. I constantly pass by both stores in Manhattan and rarely see people inside shopping. Because of that I thought their business model was to use them as showrooms, similar to what Bonobos does. I guess people just weren't buying Varvatos at all, lol.

The Detroit store made sense from a marketing perspective due to Chrysler's Made in Detroit campaign, and the Varvatos edition of the Chrysler 300.

I've bought things in the varvatos store a few years ago, it wasn't packed but there were a good amount of people there and there was plenty of foot traffic on woodward. I have been in the lululemon store and others more recently and there were always people shopping and going in an out. People dont realize that downtown population has grown extremely rapidly and it's almost entirely high income workers, also tourists spend time there and shop as well and suburbanites come and shop whenever they visit.

Merchants row's rise in retail has been nothing short of extraordinary, it's not some "they're just moving dirt!" conspiracy that trolls like to push.

Anyway, it seems every high end clothing/accessory store is filing bankruptcy right now like neiman marcus. It's a business decision.