Report: Nine West considers restructuring as debt reaches $1.7B

Dive Brief:

Nine West, owned by private equity firm Sycamore Partners, is swimming in $1.7 billion in debt, and sources told Bloomberg the shoe retailer has been approached by restructuring firms offering proposals to reduce the debt. Spokespersons for Nine West and Sycamore declined to comment.
S&P and Moody’s this week cut Nine West's credit rating and both warned that weak operations and revenue decreases could prompt another downgrade. The retailer is also losing market share amid softening apparel sales and competition from e-commerce, Bloomberg notes.
Sycamore acquired Nine West in 2014 for $2.2 billion, along with 34 other Jones Group brands, including Anne Klein, Easy Spirit, Bandolino, Enzo Angiolini, Givenchy, Gloria Vanderbilt, l.e.i., Jessica Simpson, Jones New York, Kasper, Stuart Weitzman and Kurt Geiger.

Dive Insight:

Private equity firm Sycamore’s investments are heavily focused on retail and consumer brands, and that’s caused some trouble lately as sales shift online, consumers remain careful about spending and retailers struggle to adapt.

The firm most recently tussled with teen apparel retailer Aeropostale, which like Nine West has been weighed down with debt and failed to keep up with apparel trends. Sycamore Monday leveraged its $150 million loan to Aeropostale in its bid for that retailer, though another group of investors may save some stores from liquidation, a fate that seemed certain under Sycamore’s plan.

Experts have told Retail Dive that Aeropostale has been slow to shift away from the logo-centric clothing, which had been a central strategy for it and rivals American Eagle Outfitters and Abercrombie & Fitch. Likewise, Nine West hasn’t maintained resonance with consumers.

Nine West was founded in 1978 to be an affordable but fashionable option for women, but retail demands a constant watchful eye for changing tastes and incoming trends, Mark Cohen, Columbia University retail studies professor, told Retail Dive earlier this year.

Sycamore specializes in retail investments, but it may not have the retail chops it takes to keep a brand thriving. In any case, Suyun Qu, an analyst at S&P Global Ratings, this week said that Nine West is in trouble.

“[Nine West]’s leading position in the U.S. footwear and accessories market is eroding, given the marketing missteps and the quality and fit issues with some of its key brands,” Qu said in a report cited by Bloomberg, adding that its debt and weak operations are “likely to drive Nine West toward a debt restructuring or exchange over the next year.”