6 European Fashion brands leaving the US market

The retail sector has been undergoing some major changes in the USA these recent years. Lots of US retailers are reshaping their distribution models, while closing thousands of brick and mortar locations altogether. Kohls, Target, JCrew, Bed Bath & Beyond, CVS, Victoria Secret… The list goes on. European retailers operating in the US market are suffering the same fate: Topshop, Diesel, Charlotte Olympia and KIKO have already filed for bankruptcy. BCBG Max Azria and Guess are also undergoing nationwide foreclosures. One good news out of this ‘retail apocalypse’: Digital and e-commerce are flourishing more than ever.

TOPSHOP

Date: May 24 2019. Origin: United Kingdom. Category/Product(s): Fashion Retailer

The British retailer will close all 11 of its U.S. stores, including Topman, after its parent company, Arcadia Group, filed for bankruptcy last week. Topshop currently operates two stores in Manhattan, along with outposts in Miami, Glendale, Houston, Chicago, Los Angeles, Las Vegas, San Diego, Washington, D.C., and Atlanta. The company will also close 23 stores in the UK and will slash rents at other locations. Nearly 520 jobs are at stake as a result of the closings. The brand will has already begun liquidating inventory at U.S. stores. However, Topshop and Topman clothing will still be sold online and through other wholesale partners, like Nordstrom. The store closures were labeled a “tough but necessary” measure for the business in a statement from Ian Grabiner, the CEO of Arcadia Group.

Furthermore, Arcadia’s billionaire chairman Philip Green faced allegations of sexual harassment, while allegedly making racist remarks and acting in an abusive manner toward employees. While Green denied the accusations, it didn’t prevent customers from boycotting the brand in October 2018. After news of the sexual harassment claims became public, Beyoncé dissolved her partnership with the brand and bought back Green’s stake in her Ivy Park athleisure line in November 2018. At that time, a spokesperson confirmed that Beyoncé had “acquired 100 percent of the Ivy Park brand.” The singer has since announced that she will rebooting Ivy Park with Adidas as her partner.

DIESEL

Date: March 2019 Origin: Italy. Category/Product(s): Denim & jeans

Denim fashion brand Diesel filed for bankruptcy in March 2019, citing mounting losses at its 28 brick-and-mortar locations in the US. The company had also made what proved to be an ill-timed $90M capital investment, mostly in its stores, that did not bear the desired fruit. In addition, the fashion denim company claims that multiple incidents of theft and fraud led to a $1.2M loss over the last three years. The firm has not announced store closures, but it has outlined a plan for recovery that includes opening new stores and retrofitting some old ones to make their operation more cost-effective

CHARLOTTE OLYMPIA

Date: February 2018. Origin: United Kingdom. Category/Product(s): Luxury women’s shoes and accessories

Charlotte Olympia filed for Chapter 11 bankruptcy in February 2018, citing the “unprecedented disruption in the retail market.” The company’s assets totalled $3.26M, owing nearly $20M in debt. Charlotte Olympia closed all four stores in the US after securing $410,000 in debtor-in-possession financing to support its operations and liquidation costs.

KIKO USA

Date: January 2018. Origin: Italy. Category/Product(s): Beauty

The American subsidiary of an Italian makeup retailer filed for Chapter 11 bankruptcy in January 2018. The company has made plans to restructure which includes the closure of nearly all of its remaining domestic stores. According to the company’s chief executive, Kiko USA suffered from extremely high operating costs and continually depressed profits in recent years. While Kiko had witnessed its online sales grow in 2017, it was not enough to protect its brick-and-mortar stores from the rise of e-commerce and overall decline in shopping mall foot traffic.

Finally, two major US fashion brands going out of business are Guess Jeans and BCBG Max Azria. These are not European brands per say, but were created by Europeans settling in the US.

GUESS?

Date: 2017 Origin: USA. Category/Product(s): Denim & jeans

In its most recent financials, Guess reported dismal results in its Americas Retail segment, with a 13.1% decline in U.S. dollars through the third quarter 2017 and comp sales dropped 12% including e-commerce. In 2017 Guess? shuttered 60-odd stores and was expected to close another 100 to 120 stores in 2018, leaving it with about half the brand’s foot print from just a few years back when its stores numbered 400. With such a dramatic comp sales decline, however, one can only guess if the pace of store closures will accelerate this year.

BCBG MAX AZRIA

Date: February 2017 Origin: USA. Category/Product(s): Women’s Fashion

The Los Angeles-based brand listed liabilities of more than $500 million when it filed for bankruptcy in February 2017. The chain closed 118 store locations nationwide that year, though more than 300 remained in operation under a company-wide reorganization. After filing for bankruptcy protection in February 2017, BCBG Max Azria was bought by Marquee Brands and Global Brands Group Holding by in July. By that time, BCBG had already closed 120 stores to leave 71 still in operation. But upon closing the deal, the new owners will keep only about one-third of those open, continuing operations on a total of 22 stores and the company website. What remains is an exceedingly small base on which to rebuild a fashion brand on the rocks after losing its founders’ inspiration and vision, as both Max and his wife Lubov Azria have already jumped ship.