Brookstone, Quirky Specialty Gift Retailer, Seeks Bankruptcy
(Bloomberg) -- Brookstone Inc., whose quirky products are a staple of airport shopping, filed for bankruptcy protection with a plan to rid the company of burdensome leases and inventory by getting out of malls.
The Chapter 11 petition lists assets of $50 million to $100 million and liabilities of $100 million to $500 million, according to court documents filed Thursday in Wilmington, Delaware. Brookstone will seek approval for up to $30 million in debtor-in-possession financing from Wells Fargo Bank NA and Gordon Brothers Finance Co., according to court papers.
The specialty gift retailer, which sells everything from remote-control drones to massage chairs, is the latest in a spate of bankruptcies in an industry beat down by online competition and a surfeit of stores. Mall tenants in particular have suffered, leading to bankruptcies like Gymboree Holding Corp., and Rue21 Inc., which reorganized with fewer stores. Other merchants like Bon-Ton Stores didn’t survive.
Brookstone operates 137 stores across 40 states and Puerto Rico, with “substantially all” of the mall outlet slated for closure, according to the filing. The mall stores have lost money each year since 2014, the papers show, while the airport stores have been profitable and won’t be included in the closings.
The goal is to “sell a streamlined and healthy business to a bidder that can operate under the Brookstone brand into perpetuity” before the end of September. Prior to the bankruptcy, Brookstone hired Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to manage the store closings.
This will be Brookstone’s second trip to bankruptcy court since 2014, when the Merrimack, New Hampshire-based company filed a Chapter 11 petition with a deal to sell its assets to Spencer Spirit Holdings Inc. for about $146.3 million. A group of Chinese buyers backed by retailing conglomerate Sanpower Group and Hong Kong-based private-equity firm Sailing Capital subsequently outbid Spencer with a deal valued at about $174 million.
The 53-year-old company began with an ad placed in Popular Mechanics, according to its website, and was named after the farm where the founders lived. In 1973, it expanded from its catalog offerings (with items like self-watering plant pots) to open its first store. The company says it helped introduce brands such as Fitbit and iRobot to American consumers.
The case is Brookstone Holdings Corp., 18-11780, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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