March 20, 2008

Whoa, Babystyle Files For Chapter 11 Bankruptcy

babstyle_ch11.jpg

I'm looking into this, and haven't seen it reported anywhere else yet, but I hear eStyle, inc., the parent company of babystyle, cadeau, and kidstyle, filed for bankruptcy protection today.

Stay tuned. [here, I guess because it's been 36 hours since the company filed, and Daddy Types is the only place that seems to have the story. Ah wait, chapter11blog has two auto-generated sentences.]

update a few minutes later, after reviewing some of the filings with the US Bankruptcy Court, Central Calif. District:

The filing actually was yesterday, 3/19, and the first hearing is tomorrow, 3/21.

It looks like the company is feeling the pinch of too-rapid expansion of their retail stores, combined with worse-than-expected mall performance in a few of their locations. They're implementing a reorganization and seeking immediate relief by closing six of their 23 store locations--five babystyle stores, and the Cadeau store on Melrose--and holding liquidation sales of those stores' inventories within five weeks. [Seasonal merchandise, and all.] The bankruptcy filing is part of an attempt to overturn restrictions in some store leases against holding store closing/liquidation sales.

In addition, the filing states:

  • that the "Company's operations have not been profitable" and that "merchandise leadership" and "infrastructure requirements" to support "new store growth" created operating losses and "put pressure on eStyle's cash availability." [I haven't found any filings with actual numbers yet.]
  • that the Company "has been unsuccessful in its efforts to obtain additional financing from shareholders and third parties,"
  • the Company has let 13 people go in the corporate headquarters, and
  • the Company "is exploring whether a sale of its business is a viable alternative means" for resolving the bankruptcy.

    Details on the locations of the proposed store closings after the jump:

  • In addition to the online and catalog business, eStyle currently has 21 babystyle stores, and two Cadeau maternity stores [which my wife absolutely loves. The original New York store was the main source of most of her maternity wardrobes for both kids so far; though she didn't use the term "lack of consistent merchandise direction," she did mention that she wasn't feeling either the Cadeau online stuff, or the mix of Cadeau and babystyle in the store this time around. But that's more of a sidebar.]

    Anyway, the Ch. 11 filing asks for emergency permission to close 6 stores and conduct liquidation sales of those stores' inventories within the next five weeks, to maximize the value of seasonal merchandise. The stores slated for closing are:

  • The Shops at Mission Viejo, Mission Viejo, CA
  • Barton Creek, Austin, TX
  • Willow Bend, Plano, TX [which would leave just one store in Texas, in Dallas' North Park]
  • Roosevelt Field, Garden City, Long Island, NY [the Westchester and Short Hills, NJ locations would remain open]
  • West Farms, Farmington, CT [both MA stores would remain open]
  • Cadeau on Melrose, in LA [the NYC store would remain open.]

    For people in the unprofitable cities, I see some great deals on some strollers and floor models coming soon.

  • 27 Comments

    What?!?! Please find out more!

    Didn't see that coming. Although I did notice that the Mission Viejo store never seemed to be as well stocked as the Fashion Island store in Newport Beach.

    The Cadeau is right on my block, and I have a ton of baby showers coming up. Hopefully the in-store babystyle gear will be part of the liquidation and not just shipped over to the Montana Ave. store.

    [Laurie's a former colleague of mine from way back in the Disney days, so I didn't want to be too "WOOHOO! A SALE!" about things, but if it helps them get straighted out... WOOHOO! -ed.]

    I used to work in corp babystyle. I'm not surprised. I wouldn't blame store growth...all areas of the company were poorly managed. New leadership is needed.

    Wait.. liquidation sale?! At the CT store?!?! When! How deep a discount will I get on a bugaboo?!?

    [In the filing, the CEO says they want to closet he stores by April 30th. When FAO Schwarz went out of business in 2003/4, Bugaboos sold out completely at 20-25% off, but they only had red. -ed.]

    Wow! That is shocking. It seemed as if the stores were doing well out here. I guess they grew too quickly...

    uh, yeah, I need to know when that Willow Bend sale starts.

    I just got off the phone with someone at the roosevelt field location, right now the +entire+ store is 20% off, with the closing to happen "sometime in april"....so you cna bet I will be trecking back once a week or so as the discounts rise! too bad, though i enjoy the store....

    All of the bugaboo and other high brand merchandise will be shipped to the remaining stores,(so we hear) sorry no discount on that, however we do have quite the sale going on, and will most likely continue to cut prices until all is gone. Unfortunately, we cannot honor discount coupons, or babybucks, during the closing sale, but the remaining stores will, of course.
    We appreciate the wonderful customers we have had at mission viejo, and also the ones who have expressed genuine concern for those of us who have lost our jobs.
    Thank you, Babystyle store 5, mission viejo

    Hi,

    Trust me...no one is more shocked than me to learn Babystyle filed for bankruptcy!! We are one of their T-shirt vendors, Someday Dreamers (golf pro & environmentalist someday tees) and they owe us over $16,000!!! My husband and I are a mom & pop business...thank goodness we have our teaching jobs during the day. However, our business depends on such orders from babystyle. It's a hard pill to swallow knowing they are still selling our merch., but not paying us. Basically, we "gave" them thousands of dollars. Teachers can't afford to give anyone thousands of dollars!! If anyone out there has ANY advice for us, please email us at christy@somedaydreamers.com. Also, go to our web site (www.somedaydreamers.com) and mention you read this. We'll sell you any of our tees for 33% less than what Babystyle sells them for! Thank you!

    Christy

    My wife and I are so sad and hope babystyle works through their issue. We just had a little boy and we registered at the babystyle in Manhattan Beach - we were thrilled with the selection and the quality. My wife still wears her Cadeau maternity clothing. I'm a business man and have seen many companies go through Chapter 11 filings and for the most part companies emerge stronger and better than they were before. Good luck Babystyle. We support your decision for change and growth! And we'll continue to shop.

    Hi all - I'd like to give some advice to the companies that find that they may loose some money out of the filing. I was affected a few years ago by the filing of another company in the baby industry and as a business owner I found that eventually you will be paid - At first my small company was in for $32,000 and when it was all said and done I received close to $24.0 as the settlement. I did panic at first, my husband and I had just bought a home in NC and he was still in medical school. Yes, panic...but keep the relationship with the company open. I did and today because of my support and relationship during their struggles I am in their top 20 vendors and bring in about 550,000 per year with just them. It also allowed me to open up additional accounts throughout the industry. In business, nothing is ever perfect and we as small business owners MUST protect ourselves and be prepared. In the bad economic times we're currently in, you have to know these things can and WILL happen, but if you're smart in the beginning this won't affect you at all. Stick with it...you'd hate to be left out if they come back stronger,better and bigger.
    Just some advice from one "mom and pop" company to another.

    I heard about this last week from a good friend in the industry - and it is upsetting for those of us in the industry. I had this happen to a number of our stores that were closed last year, and we never got paid (Bellini stores). It is part of doing business I guess - but when a big one falls, we all have to take notice.

    just heard about this yesterday from friends who ship them. i used to work there, but left after after a round of layoffs in 2000 (i wasn't laid off, but everything took on a dark tone after the dot com crash). i've been on maternity leave from my own line and let me just say "thank god" i had no orders for them!!! sad though as the maternity market is so small & not alot of places to sell to...but, hello? cadeau? ummmm, a little too expensive for them. every time they tried that price point, they failed. believe me, there is not a whole lot of people wanting to buy high end maternity-even if they can afford it.

    Hi,
    Regarding the post by Gabby she was wrong about the strollers being sent to other stores. I just got back and was told she no longer works there and the strollers are 20% off. She posted before she even knew what the scoop really was. They currently have some Quinny Zapps, Bugaboo Bees, a Maclaren Triumph(red with stripes),a Maclaren Triumph double in brown,a bugaboo cameleon, and a graco infant carseat. Everything in the store is marked 20% off and if it's marked down you still get an additional 20% off. Also sale shoes are an additional 30% off. I'd call to get an update on their stroller stock though jsut incase. It doesn't seem like the're doing holds either.

    ...I was in a closing Babystyle store this past weekend after I saw Lucindas email and they did have a few strollers a week ago, but I guess it was a miss shipment and now they have been sent out of the store. The few strollers and car seats they had were all last year models or items in old boxes, damaged boxes. I really wanted a great deal....maybe they'll change their mind.

    I went shopping at Babystyle Mission Viejo yesterday and got 20% off on a Maxi Cosi carseat in a great color that I was going to buy any day anyway. These are never, ever EVER on sale! I think they were out of bugaboos but had lots of bugagoo accessories if you already have one (why???). They did have some rock star and maclaren umbrella strollers that I was eyeing up, but they will have to go down more than 20% to match web prices.

    I was in the Babystyle in Mission Viejo yesterday and I did see Maclaren Volos and Maxi Cosis, but they were last years colors in the Volos and the car seats were damanged boxes. I purchased one for my sister. The Bugaboo accessories were on sale, but I noticed Bergstroms also has them on sale apperently they're on sale everywhere. Looks like they have a ton of clothing on sale and very little gear stuff. The store closes officially at the end of the month.

    I used to work for this company!!!and hate to say it....Its not worth the money and people in head office are money hungry...I was not surprised that this happen to them...."What goings around comes around" I was also not surprised that The VP of the company left too...She was great person!!! But who knows now....You can always dream big...but at the end your not going to get far...But I have learn so much how retail can scan you for money lie to you.....anyways wish them the best! : )

    My friend works at the babystyle main headquaters and yes all this is true. Sadly she was laid off last week and she said they are closing 6 more stores.

    I was laid off last week from the company and even though it was hard after years of service I have to say I was pretty glad to get out. I needed a change and the company is really changing. Even though I was a victim, I'm really happy for the company. It's finally headed in the right direction. The changes they made needed to have happened several years ago and I think they'll be fine. They have an entirely new management team and they're working really hard to get it back on track. Really good people there. As for me...I'm staying home with my family like I should have years ago. They've also been really helpfull in trying to get me another job. Like I said...overall good people and I wish them well. It's still a great brand with tons of potential.

    I'm in MA and the stores here are now closing...I have to say, BabyStyle was a good idea that went wrong. I was annoyed when they changed the terms of their membership/baby bucks program WAY back. First they offered free shipping if you had spent a certain amount of money...so, I shopped there for all gifts, etc. to make it worth my while. Then they said the memebership expired after a year...you had to start all over again from zero. :-(

    Recently they redesigned all of their great "newborn essentials"...I don't know why...I loved them as they were and always bought them as newborn gifts for friends. Now they have this weird stitching...the whole point of the essentials was that they were soft and didn't have rough trim.

    Plus, the fact that they could never coordinate the online baby bucks with the in store baby bucks always seemed like a sign of poor management. Umm, wouldn't you want to make you most loyal customers happy by letting them earn rewards that worked both online and in store without any glitches?

    Seems like they have been on this path for a long time...and in our neck of the woods a lot of the sales staff in the stores were really surly. I had the impression they were working there just to get the discount and were very resentful of customers who came in and actually paid full price for the merchandise. One of them actually told me to take my child off of formula before he reached one year because "milk is cheaper and that formula is way too expensive." Thanks for the unsolicited medical advice, Babystyle Sales Woman. Maybe some sales training for their staff may have helped their in-store sales?

    ...and don't even get me started about those baby girl clothes with the squirrels all over them...who thought that was a good idea?

    I agree the last post about the poor design changes on some of their "bread and butter" collections - being a regular shopper myself, it always stinks when some of your favorite items change for all the wrong reasons. However, I have to say that as someone who has worked in retail for years, don't let a few poor experiences with a sales person define the entire company. There are some people out there that work retail that just don't understand what's appropriate and not appropriate to say to a customer, but there are SO MANY people out there that truly just want to make customers happy and want to make shopping easier for parents who and I'm sure many of these Babystyle employees of the closing stores are really having a rough time trying to play on both sides of the fence. Again, I know there are sales people out there in the world that just don't get the level of service that a busy parent needs sometimes, but for those employees that are losing their jobs and really care about their customers...Best of luck to all of you.

    I heard through the grapevine that The Right Start is supposed to buy Babystyle on July 8th. There is a court hearing that day to handle the 'auction' sale of the all things Estyle.

    Guess this means I better hurry up and use my babystyle giftcards online. With my luck they will not be accepted soon since there won't be a babystyle anymore.

    [you're right; the deal was filed on friday, and the auction was approved monday. -ed.]

    just heard the BabyStyle store in the Westchester Mall in NY is closing tomorrow. That is a shame because they had nice stuff. Plus everything was on deep discount and now probably all gone. I would have bought my daughter tons of stuff if I knew this in advance. I wonder if the stuff online will go on sale as well?

    [now we know the price of not reading Daddy Types three weeks ago: 20-80% of retail. -ed.]

    First off "Kelly" -- From the above June 15th post...Don't flatter yourself in saying that the employees were resentful of you, because you were paying full price...Trust me when I tell you that no one cared.

    Second of all, you really shouldn't comment on something that you know nothing about. Babystyle has always been a good idea, however, everyone makes mistakes...and every single employee is paying the consequences. My best friend was working there for awhile, and now she is dealing with the aftershocks of the corporations errors.

    Lastly, I have worked in retail myself, and I just want to make very clear that the customer is NOT always right. You sound like you are someone who would believe that theory, and unfortunately, it's people like you who make working in retail environments extremely unpleasant.

    Don't comment on something that you do not understand. It's unnecessary.

    [frankly, I thought Kelly tried a bit too hard to connect the dots on the employee attitudes she encountered. Catch me on the wrong day, and I can be pretty surly, too. But a customer's POV that merchandise has been poorly redesigned and lost its distinctiveness is a totally relevant comment. And a retail business that opens stores too quickly and too far away, that changes its merchandise mix around in a way that doesn't attract customers, and burns through $140 million before being sold for $5 million in a bankruptcy sale is several mistakes short of a "good idea." -ed.]

    I live in Atlanta and blessed to live very close to America's Mart buying things wholesale. How did you get a niche and sell to BabyStyle. I shop for my clients and they love everything and all of their friends "want it" I'd love to corner a market and sell. Any advice? Thank you in advance. I'm a nurse by trade so I need tons of advice!

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