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Lord & Taylor is the latest venerable retail name, with a history stretching back to 1826, that has succumbed to the pandemic by filing for Chapter 11 in Virginia Sunday along with its parent Le Tote.Lord & Taylor follows other merchants into bankruptcy protection including Brooks Brothers and Neiman Marcus.Le Tote, which acquired Lord & Taylor less than a year ago for $100 million, said this morning that it would solicit bids for both its overall business as well as Lord & Taylor and conduct store closing sales as part of the restructuring process. In order to fund operations, the company has obtained court approval to utilize cash from its secured lenders.The store closing process has begun at 19 of its 38 locations and is being managed by liquidators Hilco Merchant Resources and Gordon Brothers, Le Tote said.The chain’s story begins in 1826Though Lord & Taylor sold men’s wear, it was largely a fashion destination for women who were seeking to buy clothing for the office, better ready-to-wear, dresses and special occasion outfits, said Mary Ann Domuracki, a managing director at investment bank MMG Advisors. It also had an expansive beauty department.However, even during its hey day, “I don’t know of anyone that would have said it was luxury,” she said.Lord & Taylor occupied a space in the retail landscape somewhere between mid-tier department store Macy’s and luxury retailer Saks. It competed more directly with Nordstrom and Bloomingdale’s, though its footprint was largely confined to the Northeast, the Mid-Atlantic and parts of the industrial Midwest.Its history stretches back to 1826 when it was founded as a dry goods store by Samuel Lord and George Taylor in New York City.Lord & Taylor’s latest incarnation, though, dates to 2006 when real estate mogul Richard Baker acquired it for $1.2 billion from Federated Department Stores. Federated, the parent of Macy’s, had merged a year earlier with Lord & Taylor’s owner St. Louis-based May Department Stores, the parent of Famous and Barr, in an $11 billion transaction creating what we know today as Macy’s.Lord & Taylor, in fact, would be the cornerstone for Baker’s expansive retail empire, as he would go on to acquire Hudson’s Bay and then merge the two, and later add Saks.The now-bankrupt chain’s Fifth Avenue location, its flagship since 1914, was ultimately sold by Hudson’s Bay to WeWork in 2019 for $850 million.Though Baker invested early in reviving Lord & Taylor, via store renovations and bringing in fashion designers favored by fashion magazines and critics such as label Tuleh’s Bryan Bradley, he ended up selling it to Le Tote last year for $100 million consisting of cash and a secured promissory note.Hudson’s Bay even committed to pay the rent for Lord & Taylor for three years under the merger agreement, amounting to $77 million in total rent liabilities.But by early April, the company told Adweek it was weighing all of its options, including bankruptcy, as it struggled due to mandated store closures during the height of the pandemic.The sale to Le Tote ends in bankruptcyThe bankruptcy process for Lord & Taylor, as it is for so many retailers, is an opportunity is address structural issues in the business, said Domuracki, whose firm was involved in both the bankruptcies of apparel brands John Varvatos and J.Hilburn.Though the sale to Le Tote resulted in Chapter 11, she said the transaction last year benefitted both parties in different ways.For Hudson’s Bay, it was able to preserve a tenant for real estate it controlled via a lease or owned. And for Le Tote, it was able to purchase an established retailer at a discount. That gave the accessories retailer access to both the chain’s customers and a physical presence, Domuracki said.Continue Reading

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