Los Angeles-based Frederick’s of Hollywood has not fared well in its battle to compete with rival lingerie brand Victoria’s Secret, and on Sunday filed for Chapter 11 bankruptcy. The retailer closed what was left of its brick-and-mortar locations last week in preparation for the bankruptcy filing and now has a $22.5 million buyout offer on the table from Authentic Brands Group, LLC.
Under the Authentic Brands agreement, the retailer will continue to operate an online-only business provided another buyer doesn’t come forward with an offer and agrees to reopen stores, The Wall Street Journal reported. If any other offers are made, the retailer will hold an auction on May 28.
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The company notes on its website: “We no longer have store locations. Our online store offers the same selection of products. Please shop here with our Free Shipping offer.” Online operations will continue throughout the bankruptcy during which Frederick’s will conclude its affairs.
A retail expert from consulting and accounting firm Marcum Ron Friedman told the Los Angeles Times the closures didn’t come as a surprise.
“As a company, I think they [Frederick’s] became old and stale,” he said. “Victoria’s Secret has been a home run compared to them.” If the company can put an effective marketing strategy in place, however, Friedman said it could be profitable as an e-tailer.
Frederick Mellinger launched the pinup-inspired brand in L.A. in 1947, then moved into mail order catalogs in the ‘60s, and later added sex toys and racy underwear to its offerings.
The company declared bankruptcy in 2000, bounced back in 2003 and went public in 2006. In 2013, Frederick’s was bought out by a consortium including HGI Funding, a subsidiary of New York-based Harbinger Group Inc., and some of its own shareholders.
Frederick’s reportedly has roughly $36.5 million in assets and $106 million in liabilities. The company is carrying $33 million in secured loans, $16.2 million in unsecured promissory notes, and it estimates trade debts and landlord liabilities of $56.7 million.
This article has been updated from a previous version.
