Back in 1947, a businessman by the name of Frederick Mellinger started a little company on Hollywood Boulevard called Frederick’s of Hollywood, which quickly gained success by selling high-quality lingerie to Hollywood starlets and rich housewives.
Now, over 65 years later, Frederick’s has announced that it will start shutting down its 94 stores as it files for Chapter 11 bankruptcy. The New York Daily News reports that the company currently has $36.5 million in assets, but that it is $106 million in debt. According to an official statement, lagging sales and increased competition from other high-end lingerie brands caused the company to stall after turning private last year.
According to the Wall Street Journal, the company came to an agreement on April 19 with retail corporation Authentic Brands Group, LLC, in a Delaware bankruptcy court. Frederick’s will be selling its online operations to Authentic Brands for $22.5 million, but all of its physical stores will be closing.
Personal bankruptcy filings have already become more common throughout California over the past decade, specifically picking up around the time that the economy started weakening; researchers estimate that personal bankruptcies have increased by 600% in California alone since 2006.
It’s no surprise, then, that businesses would be subject to bankruptcies too — regardless of where they’re located or how successful they appear to be.
According to data the from New Generation Research, Chapter 11 bankruptcies (which businesses typically file) dipped to their lowest point during the first quarter of 2015 since the economy started declining sharply in 2007. California, however, has continued to be one of the top three states (along with Illinois and Texas) with public bankruptcy filings, with both small businesses and large corporations.
Frederick’s has become an important high-end retail store for Hollywood’s elite, and Mellinger has historically been credited with inventing the infamous push-up bra.
The NY Daily News states that the company will continue online operations under the Authentic Brands corporation.