Liberated Brands, an outdoor-lifestyle apparel seller, is the latest U.S. retailer to add to the pile of stores slated to close this year as it plans to liquidate its fleet of roughly 124 brick-and-mortar locations.
The Costa Mesa, California-based company — onetime licensee of surfing-and-skateboard-related labels such as Volcom, Billabong, Quiksilver, Spyder, RVCA and Roxy — will be winding down its business after filing for voluntary Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware this past weekend. Court documents included a list of Liberated Brand's portfolio of Volcom and Boardriders stores.
While Liberated Brands said its 100-plus retail locations will be shuttered, according to its statement the status of its Hawaii stores is "currently in flux" and is being negotiated. The company didn't immediately return an email from CoStar News on Thursday seeking comment.
In the wake of seeing its sales soar during the pandemic, Liberated Brands blamed its financial downfall on its underperforming brick-and-mortar footprint, challenges from the macroeconomy, and stiff competition from "fast fashion" companies that offer inexpensive apparel online.
It will now join the club of companies shutting stores in the new year. At least one retail analytics firm, Coresight Research, has forecast that 2025 will be a record breaker for store closings, with roughly 15,000 expected. So far this year, it is already tracking more than 2,000 planned closings, which will be undertaken by chains such as Macy's and Party City. Last month, crafts-sewing chain Joann filed for bankruptcy a second time and it's possible its stores will be closed.
Gordon Brothers Group has started liquidation sales at Liberated Brands' stores. The retailer has already closed its corporate offices and laid off about 350 corporate employees and roughly 1,040 retail staffers, according to court filings.
Liberated Brands was founded in 2019 by its current CEO, Todd Hymel, who had been part of the management team of Volcom, a modern lifestyle clothing company rooted in skateboarding, surfing and snowboarding. New York-based Authentic Brands Group acquired Volcom in 2019. In September 2023, Liberated Brands purchased the rights to become the licensee — and the retail and e-commerce operator for — Authentic’s newly acquired brands Quiksilver, Billabong, Roxy, RVCA, Honolua and Boardriders in the United States and Canada. Liberated Brands lost that deal in December.
The company saw its North American sales skyrocket during the pandemic, rising from $350 million in 2021 to roughly $422 million in 2022, Hymel said in an affidavit. He attributed the new demand for the company's clothing "to increased outdoor leisure time and governmental stimulus support provided to customers."
But the tide soon turned for Liberated Brands when "the COVID-19 pandemic abated and gave way to a sustained period of high interest rates and inflation, customer demand weakened," according to Hymel.
"Liberated’s significant brick-and-mortar retail footprint has imposed a further drag on profitability," he said. "During the COVID-19 pandemic, consumer demand for online shopping increased across the retail apparel industry and the demand for the brick-and-mortar shopping experience did not bounce back fully after the crisis had abated. The effects of COVID-19 continue to challenge the fashion and sport apparel industry today."
In addition, now "consumers can cheaply, quickly, and easily order low-quality clothing garments from fast fashion powerhouses and have such goods delivered within days," according to Hymel.
"These fast-fashion companies can cater to micro-trends as opposed to the traditional seasonal trend-forecasting retail model," he said. "Liberated, and other companies reliant on the traditional retail model, have generally suffered from decreased profit margins after losing part of their overall market share and pricing power to fast fashion."
Facing operational losses, Liberated Brands was unable to pay its minimum guaranteed royalties and defaulted under it license agreements with Authentic in December. Authentic terminated Liberated’s licenses for the United States and Canadian wholesale and e-commerce operations relating to Volcom, RVCA and Billabong, Hymel said.
The Chapter 11 filing does not impact the future of those brands, which "already transitioned to new, well-capitalized partners," according to Liberated Brands.
The bankruptcy process will be financed by JP Morgan Chase, which is providing a $35 million in debtor-in-possession asset-based financing facility, according to court documents.
For the record
Liberated Brands has retained Kirkland & Ellis and AlixPartners to facilitate the Chapter 11 restructuring process. JP Morgan has retained Morgan, Lewis & Bockius and Berkeley Research Group.