True Religion Apparel the upscale jeans maker announced on Wednesday that it was filing for bankruptcy protection. That makes the company the most recent apparel firm in southern California to file for bankruptcy as online shopping becomes more and more popular.
The once very trendy jeans maker was hurt as well by missteps in design and store displays that were not catchy as shoppers sought newer more exciting things.
True Religion announced that together with its Chapter 11 bankruptcy filing, TowerBrook Capital Partners, its owner, had reached a deal with its lenders to cut the debt of True Religion by nearly 75%, as it will continue operating.
CEO of True Religion John Ermatinger announced in a prepared statement that the company was taking a big step in reducing its debt, reinvigorating the iconic True Religion brand and positioning the business for growth and success in the future, that includes investing more resources in its efforts online.
The firm, based in Manhattan Beach employs over 1,900 people, and sells its pricey jeans as well as other clothing in more than 140 stores with Last Stitch and True Religion brand names, as well as through other department stores and boutiques.
The company was founded during 2002, and grew in popularity due to its myriad of pricey designs. Between 2007 and 2012, the company close to tripled its size, with revenues that topped out in 2013 at $490 million.
Formerly the company was publicly held, but in 2013 went private when TowerBrook Capital acquired it for more than $835 million.
In 2013, True Religion started to experience dropping sales due to a trend by the consumer to move from tradition brick and mortar retail to shopping online, said CFO Dalibor Snyder, in a company filing with the a bankruptcy court in Delaware,
That online trend has accelerated even more of late with shoppers moving to e-commerce sites. In addition, the increase in stores known as “fast fashion” that have lower prices like Zara and H&M has hurt True Religion as well as other apparel makers.
That shift caused bankruptcy filings for clothing retailers based in southern California such as Pacific Sunwear of California, Nasty Gal, Wet Seal and American Apparel.
Chains have also shuttered stores in many malls over the past year including J.C. Penney, Payless Shoe Source, Sears and Macy’s amongst others.
Problems at True Religion were impacted adversely by new designs of products the company launched that did not resonate with consumers, said the CFO in his filing.