PacSun Has Filed For Bankruptcy, To The Dismay Of Your Tween Self

Photo: Araya Diaz/Getty Images.
PacSun, the mall staple that may have filled your closet with California-inspired faux-surfer gear at some point in your tween or teen years, just filed for voluntary bankruptcy protection. In the filing, the brand attributes its financial woes to the poor expansion decisions made by prior management: to open too many stores, neglect important brand alliances, and green-light unsuccessful brand extensions. Also, the rise of e-comm hurting traditional brick-and-mortar shopping (especially in malls) was cited by the retailer as a reason for its fiscal struggles. PacSun has entered a restructuring agreement with private equity firm Golden Gate Capital; the retailer has a loan of $100 million from Wells Fargo and a loan of $60 million from Golden Gate Capital; both loans mature in December 2016. "We plan to solve the two structural issues that operationally we could not fix on our own," PacSun CEO Gary H. Schoenfeld said in a statement the retailer released today. The loans will be used to remedy the high occupancy costs (a.k.a. rent) of the company's 601 stores that are currently open — as well as a nearly $90 million debut that will be due later in 2016, according to the statement. The retailer posted a letter from Schoenfeld on its site today. In it, he reassures customers that they won't experience much change while the company gets restructured (and while it gets some much-needed cash flow from its new ownership). "During this process, we intend to operate business as usual with no plans at this time to close any stores," Schoenfeld writes. There are also no plans, as of now, to to change store opening hours or lay off any of PacSun's 2,000 full-time employees and roughly 7,000 part-time employees. "Most importantly, I want to emphasize that our customers should not be affected by this restructuring process," Schoenfeld continues. He then outlines that PacSun's gift cards, rewards programs, and return/exchange policies will continue as usual. So, it doesn't seem like the retailer's ongoing partnership with Kendall and Kylie Jenner was enough to boost sales (though that collab ended up mired in legal drama anyway). If you're the nostalgic type, though, maybe now is a good time to head to your nearest mall and revisit those racks of Reef flip flops and shelves filled with graphic tees.

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