1/15/2015
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Bruce.Lipsky@Jacksonville.com-Jacksonville-based Body Central recently defaultd on $18 million of its debt.
Just two days after it warned that it might file Chapter 11 bankruptcy, Body Central is shutting all of its stores and headquarters completely.
The chain’s 265 stores are running “aggressive promotional sales through Sunday,” Gardner Davis, an attorney representing the Jacksonville-based chain of clothing stores geared to young women and teens, said on Friday afternoon. It has stores in the The Avenues and Orange Park malls and River City Marketplace.
The company’s headquarters and warehouse closed Friday, he said.
“It’s tragic that the company’s 2,500 loyal employees are losing their jobs,” he said.
About 185 of those employees worked at the company’s headquarters on Powers Avenue. A few congregated in front of the tan brick building, talking and hugging before leaving Friday afternoon. Others, some tearful, carried bags or boxes of their belongings to their cars. Fewer than two dozen vehicles remained on the property around 3 p.m. as a Jacksonville Sheriff’s Office vehicle patrolled the nearly empty parking lot.
Several Body Central former employees declined to speak with the Times-Union.
The company announced an Assignment for the Benefit of Creditors Friday.
“That’s similar to a bankruptcy liquidation,” Davis said. “But it’s handled in State Court and it’s faster, less expensive and more flexible.”
The company has been in financial trouble for some time. It owed $18 million to secured noteholders, Davis said, and another $10 million to trade creditors. He said the company has been paying cash for merchandise because it had no credit.
“Unfortunately, investors could not be found to finance the reorganization as a smaller, more viable chain.”
The $18 million debt stems from an emergency loan it took out last summer.
It’s been a tough time for many stores that cater to young female customers, such as Body Central. Wet Seal announced earlier this week that it would close 338 stores, including both its Jacksonville stores. Delia’s and Deb Stores both filed for bankruptcy in the past month and will liquidate.
Aeropostale, Abercrombie & Fitch and American Apparel all have been posting losses. But sales revenue at H&M, Forever 21 and Zara have grown swiftly.
Wednesday’s announcement of a potential Chapter 11 filing led to a steep drop in Body Central stock. Shares opened at $1 that day but quickly fell as low as 25 cents. Shares opened at 26 cents on Friday but dropped as low as 16 cents shortly after noon.
In the third quarter of 2014, the company reported revenues of $43.4 million and a net loss of $16.7 million.
The company was founded in 1972, with the first store opening as Body Shop in the Roosevelt Mall.
The company first went public in 2010, with 5 million shares at $13 a share. Stock prices rose as high as $30.69 in 2012. It opened 39 new stores that year.
In 2013, Jacksonville City Council approved up to $244,000 in incentives to help the company move from Powers Avenue to a 361,000-square-foot building at Imeson International Industrial Park on the Northside. The company said it would add 52 jobs with the move. State incentives would have been as high as $1.14 million.
Georgia also had bid for the company’s headquarters.
But later that year, after decreasing sales, Body Central cut 11 percent of its workforce.
By early 2014, sales and stock prices continued to fall and it announced that it wouldn’t be moving to the Northside. It did not receive any of the incentives.
Analysts were brutal.
“Body’s short- and long-term plans to become competitive have failed,” wrote Dallas Salazar at the time for Seeking Alpha. “Body’s cash levels are dwindling and I believe they have no access to capital markets. Body has passed the point of no return and bankruptcy looms over the next 18 months.”
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