California Apparel News

Blaming a tight credit market and declining spending power of young adults, Los Angeles–headquartered fashion chain Metropark USA Inc. filed a voluntary petition for Chapter 11 bankruptcy in White Plains, N.Y., on May 2 and announced plans to close all stores.

With locations in prominent California malls including Irvine Spectrum, Glendale Galleria and Westfield San Francisco Centre, the company originally said it was seeking a buyer, according to a bankruptcy statement by Metropark Chief Executive Cynthia T. Harriss.

But on May 5, the Delaware-incorporated Metropark offered going-out-of-business sales in its 69 stores in 21 states.

The retailer declared that it owed more than $8.8 million to its debtors, including fashion labels True Religion and Obey as well as some Westfield malls. New York– based law firm Cooley LLP will representMetropark. CRG Partners, also based in New York, will act as its financial adviser.

The news represents a dramatic change in fortune for the high-profile retailer, which was started in 2004 by Orv Madden, the original founder of Hot Topic Inc.

Metropark’s mission was to bring streetwear and premium denim from highprofile urban retail streets to suburban malls for a demographic of 25- to 35-year-old men and women. Business for Metropark was good enough in 2008 that it registered to file an IPO.

However, the retailer’s main demographic was one of the hardest hit during the Great Recession. Harriss noted youth unemployment has pushed to 20 percent after the recession and personal credit has become tighter.

“These limitations have resulted in a notable change in consumer tastes toward value and promotions,” Harriss stated.

Sales were disappointing in December 2010 and January 2011, according to the bankruptcy papers. Sales started plummeting after Metropark’s credit was tightened in early 2011.

Metropark reacted to the tough economy by changing its management and merchandising. In June 2010, Harriss was hired. She previously worked as president of Gap North America and president of Disneyland Resort .

In January, Lisa Chi was named Metropark’s chief merchandising officer. She previously was Lucky Brand’s vice president of merchandising.

Metropark also had revamped its website to be more social-media savvy and had been looking to renegotiate its leases.

Metropark also had been changing its merchandise mix. The retailer stumbled when it changed its look, said Aaron Levant, president of Agenda, a trade show focusing on streetwear, activewear and fashion that had been patronized by Metropark since 2004.

“They were looking for a cleaner look. Maybe they thought they would broaden their appeal,” Levant said. However, Metropark’s strength was bringing edgy clothes to the mall, according to Levant. “Now they are on par with other mall retailers,” he said. Harriss did not respond to a call requesting comment.

Metropark joins a handful of prominent California retailers and fashion labels that have declared bankruptcy since the recession, including Anchor Blue, Rock & Republic, Mervyns and Gottschalks. However, the odds were against Metropark emerging from bankruptcy, said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York retail consulting and investing company.

“It’s a small company, and a lot of financing is not available for small companies in troubled situations,” Davidowitz said. “The most logical thing for a company like this is that someone buys several locations but not the company.” —Andrew Asch