BCBG to Close Stores, Restructure as Online Shift Takes Toll

  • Company plans to focus on e-commerce, in-store boutiques
  • Retailer founded by celebrity designer Max Azria has struggled

Designer Max Azria stepped down as head of BCBG last year.

Photographer: Michael Nagle/Bloomberg

BCBG Max Azria Group Inc., the glitzy fashion house founded by designer Max Azria, is looking to close stores and restructure as the company copes with a debt burden and a shift of many consumers online.

The chain plans to reduce its focus on brick-and-mortar shops, concentrating instead on licensing, e-commerce and selling through other retailers, according to Seth Lubove, a spokesman for BCBG at Sitrick & Co. The fashion brand has operated more than 570 boutiques worldwide, including more than 175 in the U.S.

BCBG has “too large a physical retail footprint,” Lubove said in an e-mailed statement. “In order to remain viable, the company -- like so many others in its industry -- must realign its business to effectively compete in today’s shopping environment.”

The retail slump has bedeviled a brand that was long a favorite of red-carpet celebrities: Kate Winslet, Victoria Beckham and Alicia Keys have worn its fashions, which include cocktail dresses, handbags and other accessories. The Vernon, California-based company has laid off 123 people in recent months, according to a filing with the state’s Employment Development Department.

BCBG has hired AlixPartners LP to help restructure its debt load, ideally while staying out of bankruptcy court, according to people familiar with the situation. In stepping into the role, the advisory firm replaces Berkeley Research Group, the people said. Representatives for AlixPartners and BRG declined to comment.

Cash Crunch

BCBG is facing a cash crunch, but it doesn’t see bankruptcy as an imminent risk, said one of the people. Though the company is exploring its options, there’s no attempt underway to sell the business, the person said.

A number of high-profile apparel names have moved away from physical stores in the past year. Kenneth Cole Productions, a fashion house and shoe company, announced plans in November to close almost all its shops. Limited Stores Co., meanwhile, told customers it was shutting all its locations ahead of a bankruptcy filing this month.

Azria founded his label in 1989 and opened the company’s first boutique in Los Angeles in 1992. BCBG, whose name is short for the French expression “bon chic, bon genre,” acquired design house Herve Leger in 1998.

After the retailer began to falter, investor Guggenheim Partners brought in fashion consultant Marty Staff as interim chief executive officer, according to an account on his LinkedIn page. He took the reins from Azria last year to help “stabilize” the brand, Staff said.

Lubove, the company spokesman, said on Wednesday that it’s looking at a “variety of options” in a bid to restructure the business.

“BCBG is a world-class designer and producer of apparel, which with the necessary changes, should be able to be successful,” he said.

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