Dive Brief:
- Fashion retailer A'gaci shuttered its e-commerce operations, according to the company's website.
- The company also updated its return and exchange policies. As of Aug. 1, A'gaci said all sales are final and it will not accept returns or exchanges. Sales made before Aug. 1 will be eligible for in-store returns until Aug. 30. A'gaci did not return Retail Dive's request for comment.
- This comes as social media users buzzed about notices and locked doors at several of A'gaci's physical store locations in Texas, including The Galleria, Ingram Park Mall, The Domain, Midland Park Mall and Katy Mills. Users posted pictures of letters that appear to show the company failed to pay delinquent rent at those locations, all malls owned by Simon Property Group. Simon did not immediately return Retail Dive's request for comment.
Dive Insight:
The San Antonio-based company, which exited bankruptcy just over a year ago, faces more trouble.
When the company filed for bankruptcy in January 2018, it cited a rapid brick-and-mortar expansion in recent years, which included building out 21 stores, spreading "the organization too thin to effectively respond to the rapidly changing trends in the retail market," CFO Mark Butterbach said in a court filing. At the same time that A'gaci grew its physical store footprint, e-commerce was growing more prominent.
Six months later, a federal bankruptcy judge approved A'gaci's plan to exit Chapter 11. The company trimmed its footprint by just 20 stores in bankruptcy, fewer than half of the 49 stores it originally intended to shutter as part of its restructuring plan.
A'gaci shifted its focus in the wake of brick-and-mortar missteps to its online operations. At the time it filed, the company said it expected comparable e-commerce sales to increase 35% in 2019 and 25% in 2020, while brick-and-mortar comps were expected to rise 5% in 2019 and 3% in 2020. However, the fashion retailer's investment in online may have been too little, too late.
In addition to updating its return and exchanges policy, A'gaci also made a change to its loyalty rewards program and gift card policy. Non-final sales items purchased with loyalty rewards will be eligible for exchanges only. Gift cards can only be redeemed in physical store locations as well as active merchandise credits. Items purchased after Aug. 1 will not be eligible for reward points.
The notices regarding the company's failure to pay rent also aren't a first for A'gaci. According to other social media posts, the retailer reportedly faced similar issues regarding unpaid rent at its Barton Creek Square location in San Antonio in May and its location at The Galleria in March.
Other fast-fashion retailers face similar financial struggles. Charlotte Russe in February filed for Chapter 11, which resulted in the retailer liquidating, and selling off its brands and intellectual property to YM Inc. Forever 21 in June reportedly hired restructuring advisers in an effort to avoid bankruptcy.
