National Stores, a discount retailer that operates the Fallas, Factory 2-U and other apparel stores, filed for Chapter 11 bankruptcy protection.
It has become the latest company in the US retail industry to experience financial issues as more consumers are opting for online shopping.
Set up in 1962, the California-based family owned company intends to shut down 74 of its 344 stores.
It employs over 9,800 people in Puerto Rico and 22 US states.
The company filed for bankruptcy due to tough retail landscape, high costs due to its acquisition of the Conway’s chain in 2014, dip in revenues as a result of Hurricane Harvey and Maria in 2017, and a data hack, which exposed information of over 552,000 cards last year, reported Reuters.
According to National Stores chief executive Michael Fallas, the firm plans to “compete in an evolving industry” after restructuring.
The chain targets low-income communities where consumers shop by price instead of the latest trend. On average, the products it sells are around $5 each.
Store closures will commence on Thursday.
As per the petition filed with the US Bankruptcy Court in Wilmington, Delaware, National Stores has assets and liabilities ranging from $100m to $500m.
The retailer is working with lenders and creditors on the reorganisation plan to emerge out of the bankruptcy.
Meanwhile, US mattress retailer Mattress Firm is exploring the option to file for bankruptcy as it looks at ways to come out of expensive store leases and shut some of its 3,000 locations that are not earning profits, reported CNBC.
San Francisco-based luxury department store Gump’s also filed for bankruptcy protection after exploring strategic alternatives. It filed for bankruptcy protection in Nevada Bankruptcy Court last week. It intends to liquidate merchandise to pay off creditors.
Gumps and its affiliates reportedly have $61m in assets and $64m in liabilities.
Last week, speciality products retailer Brookstone also filed for bankruptcy and is in the process of closing all of its 101 mall stores. It blames the “continued deterioration of traditional mall traffic.”
Last year, its revenue dipped by 33%, far more than other mall-based chains.
Several retailers have filed for bankruptcy in the last two years. These include Gymboree, hhgregg, Claire’s, Toys R Us, and Wet Seal.