David's Bridal Hires Evercore for Debt Advice as Weddings Wane
(Bloomberg) -- Wedding season in the U.S. is not what it used to be, and bridal retailers are feeling the pain.
In the latest sign of industry stress, executives at David’s Bridal Inc. have hired restructuring advisers at Evercore Inc. and legal counsel at Debevoise & Plimpton to help turn around the budget-priced business, according to people with knowledge of the situation. The chain also appointed a new chief executive officer, Scott Key, according to a statement Friday.
David’s, owned by the Clayton, Dubilier & Rice buyout firm, disclosed the hires during a conference call this week to review earnings, according to the people, who asked not to be identified because the session was private. Some holders of first lien term loans have been working with advisers from law firm Jones Day and investment bank Greenhill & Co., according to two more people, and some bondholders are working with Houlihan Lokey as a financial adviser, two people said.
The chain owes creditors about $762 million, with the bulk due in October 2019. Bonds issued by David’s trade for half their face value, with Moody’s Investors Service and S&P Global Ratings cutting the company’s credit rating deeper into junk earlier this year on concern that it’s headed for a distressed-debt exchange.
A representative for David’s, based in Conshohocken, Pennsylvania, confirmed the adviser hires and declined to elaborate. Clayton, Dubilier as well as Debevoise & Plimpton and Houlihan declined to comment. Greenhill and Jones Day didn’t respond to messages.
Marriage rates have fallen since the 1980s, and though the amount that Americans typically spend on weddings has risen, the industry has been thrown into chaos by intense competition, online options and shifting fashion tastes. In April, Gap Inc.’s Weddington Way bridal brand announced plans to close within the next few months, following J. Crew Group Inc.’s decision in 2016 to shutter its wedding-dress business. David’s competitor Alfred Angelo closed its doors in 2017, leaving brides stranded as orders went unfulfilled.
Recent earnings at David’s reflect wedding retailers’ struggle to adapt, both to demographic changes and to the broader retail malaise. The company posted quarterly Ebitda, or earnings before interest, tax, depreciation and amortization, of $23.4 million, up 2 percent from a year earlier, while same-store sales gained 0.5 percent, according to a company representative.
Scott Key, who replaces Paul Pressler as chief executive officer, previously oversaw the company’s marketing, digital, and service teams, according to the company statement. He previously worked at Gap Inc. and led the Athleta brand of women’s yoga and athletic clothing, according to David’s. Pressler will remain chairman of the company.
"I see tremendous opportunity for David’s Bridal to continue to grow in bridal and beyond," Key said in the statement.
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