Dive Brief:
- Brookstone filed for Chapter 11 bankruptcy on Thursday and said it plans to sell the company through the court process. To fund it through Chapter 11, Brookstone has secured agreements to $30 million in bankruptcy financing from Wells Fargo and Gordon Brothers, the company said in a press release emailed to Retail Dive.
- The retailer of eclectic gadgets, travel gear and novelties plans to close all 101 remaining mall-based stores in bankruptcy "following continued deterioration of traditional retail mall traffic," the company said in the release.
- As Brookstone winds down its mall presence, it plans to restructure around its 35 airport stores as well as its e-commerce and wholesale businesses. Brookstone CEO Piau Phang Foo said those three businesses are "operating successfully and should prove attractive to a buyer with the financial resources and vision to carry our company into the future."
Dive Insight:
The sector shifts in mall retail have claimed another victim in Brookstone.
Known for its oddball electronics, gifts, travel gear and other assorted doodads, Brookstone faces the same foot-traffic problems as other mall chains. Declines in C- and B-class malls are especially acute for a retailer like Brookstone, whose curiosities and novelties might draw people in to look, but not always to buy.
Brookstone began as a direct marketer, placing its first advertisement for "hard-to-find-tools" in Popular Mechanics in 1965. After growing a catalog business, Brookstone opened its first brick-and-mortar store in New Hampshire in 1973. In 2014, the retailer was nearly sold in Chapter 11 to the parent of Spencer's, a fellow seller of unique (and amusingly nonessential) wares. Instead, it went to a joint venture between the China-based firms Sailing Capital and Sanpower Group for $174 million.
Until recently, Steven Goldsmith — who has served as an executive with The Shopping Channel, Sears Canada and what is now L Brands — ran Brookstone as CEO. According to his LinkedIn page, Goldsmith left Brookstone in April for the luxury brand LXRandCo. Brookstone quietly appointed Foo, who is an executive with the Chinese investment firm that owns the retailer, as CEO.
This second bankruptcy filing — which put puts Brookstone in a league with RadioShack, American Apparel, Wet Seal, the Walking Company and others that have made second trips to Chapter 11 — does not necessarily spell doom for the retailer given that it will continue to operate 35 airport stores and an e-commerce site. It does, however, represent a major transition as the company waves the white flag over its mall business, after earlier reports seemed to at least leave room for Brookstone keeping some mall stores open.
Michael Dart, a partner in A.T. Kearney's private equity practice and author of the upcoming book "Retail's Seismic Shift," told Retail Dive last year that Brookstone's airport locations were an advantage for the company. "It's a way of reaching a different kind of consumer with a product that's actually a tougher sell, that probably wouldn't get purchased if someone didn't go in and see it and feel it," Dart said.
