For the second time in the past four years, retail chain Brookstone has filed for Chapter 11 bankruptcy due to weak sales from its brick-and-mortar locations. A shift in consumer trend towards online spending has now prompted Brookstone to shutter the rest of its 101 mall stores.
The company suffered from a huge vacancy rate at its malls, which reached a six-year high last quarter. A number of companies that have closed down their stores at Brookstone malls include Bon-Ton, Sears and Kmart, Walgreens (WAG), Best Buy (BBY), Mattress Firm, Kay and Jared, and GNC.
On the other hand, Brookstone hopes to continue operating its 35 airport stores, e-commerce and wholesale businesses, which it plans to sell after the bankruptcy process. A $30 million loan has been secured through Wells Fargo Bank and Gordon Brother Finance to finance operations during the sale.
Brookstone had earlier filed for bankruptcy in 2014 when it still had over 200 locations running. It was then sold to a Chinese consortium named Sanpower Group for $136 million. Legal insiders have given a doubtful perception of “Chapter 22” after Brookstone’s second protection filing.
Brookstone has hired Gibson, Dunn & Crutcher and Young Conaway Stargatt & Taylor as legal advisors, Berkeley Research Group as a financial advisor, and GLC Advisors & Co. as its investment banker.