Diesel Is The Latest Retailer To File For Bankruptcy
The retail apocalypse has claimed its next victim: a premium denim company that was majorly popular in the ’90s and ’00s.
As reported by Bloomberg, Diesel jeans has filed for bankruptcy. The company attributes the decision to falling sales, a failed turnaround, and expensive leases, as well as instances of cyber fraud and theft. The Chapter 11 petition, filed on Tuesday, March 5, claims that Diesel is about $50 million in debt.
But unlike many other retailers and brands in similar situations, Diesel doesn’t plan on shuttering.
Instead Diesel has a three-year plan to turn business around and won’t be announcing massive store closures anytime soon. With the majority of its brick-and-mortar stores in the United States, the court papers outline a strategy that includes opening new stores and reimagining older stores to bring down operation costs.
As it stands, Diesel only has two full-price stores in Canada: one in Yorkdale Shopping Centre and one in Yorkville, as well as two outlet stores: one in Toronto and another in Montreal. Diesel is also carried in a number of department stores across North America.
According to Bloomberg, Diesel hasn’t turned a profit for the past 10 years.
Best known for its premium denim, the brand saw a resurgence in the early 2000s when shoppers were more willing to pay $200 and more for designer denim. While it was profitable up until 2008, the company was recovering from the recession when poor decisions began to be made.
In a court declaration, Diesel’s Chief Restructuring Officer Mark Samson said, “prior management began employing a real estate strategy that involved substantial investments in its retail stores.” The company spent $90 million between 2008 and 2015, primarily on upgrading brick-and-mortar stores.
Additionally, Diesel fell victim to multiple circumstances of theft and fraud, which included internet scammers that sent false invoices that were paid out by the company. In total, Diesel attributes $1.2 million in losses to the scams.
Diesel’s turnaround strategy will see collaborations with more social media influencers and the relocation of some of its stores.
With such a small brick-and-mortar footprint in Canada, it’s possible that shoppers here might not feel an impact. However, only time will tell. We’ll keep you updated as news progresses.
Featured image: Diesel
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