Coldwater Creek, Inc. may file for bankruptcy

Coldwater Creek, Inc. may file for bankruptcy

The women’s clothing retailer Coldwater Creek, Inc. may seek protection under bankruptcy law as early as this week, sources told Bloomberg Businessweek. The company hasn’t been profitable since 2007, and may seek to liquidate its assets in order to repay its creditors. Five months ago, the retailer said that it was exploring “strategic alternatives,” including selling itself, to settle its debt.

Coldwater Creek was started in 1984 by Dennis Pence, a former Sony Corp. executive. The company began as a catalog business, selling women’s accessories and gifts, and initially enjoyed rapid growth.

After news of the planned bankruptcy filing was reported, shares in the retailer dropped precipitously, falling 75 percent to 17 cents per share as of 2:27 p.m. in New York, according to Bloomberg.

The Wall Street Journal reported that the retailer has been struggling for months with attempts to refinance its debt or find a private-equity buyer – attempts that were ultimately unsuccessful. Coldwater Creek has approximately $353 million in total debt, $180 of which is in current liabilities, according to its most recent earnings filing.

The company posted sales of about $155 million for the quarter ending Nov. 2, 2013, according to the news source. This is down from $188 million year-over-year. In 2012, private-equity firm Golden Gate Capital gave the company a $65 million term loan, and has the option to buy stock in the retailer.

The Journal compared the retailer’s troubles to the recent troubles of Brookstone Inc., another major mall retailer that is expected to file for protection under Chapter 11 of the bankruptcy law within the next few days. Other recent retailer filings included Ashley Stewart Holdings Inc., Dots LLC and Loehmann’s Holdings Inc. Disappointing retail sales this holiday season affected many mall retailers’ bottom lines.