Vitamin World, Inc. is adding its name to a growing number of companies initiating massive cuts, with Vitamin World retail stores closing across the country as the company files for Chapter 11 bankruptcy. The vitamin retailer is currently in the process of shuttering over 100 stores as it hopes to acquire enough cash to stay afloat while trying to find a buyer. The Vitamin World bankruptcy, meanwhile, is continuing apace in court, while the company is taking on further debt due to bankruptcy loans. Vitamin World is owned by Centre Lane Partners, LLC, which purchased the company in 2016 for $25.0 million. The Vitamin World store closures began in earnest following that acquisition.
The current number of Vitamin World stores closing is actually an increase over the initial estimate, as the company is having difficulty with its reorganization plan. Following Vitamin World’s chapter 11, which the Holbrook, New York-based company filed in September, it is seeking a buyer to try and keep the profitable stores alive.
Meanwhile, the Vitamin World reorganization is having difficulty sorting itself out. While Vitamin World, “originally intended to proceed with a plan of reorganization . . . unforeseen operational challenges and liquidity concerns have caused the debtors to now pursue a sale of substantially all of their assets,” the company’s attorneys wrote in court documents filed Tuesday.
Vitamin World to Close 124 Stores and Sell Rest of the Stores
The company’s first restructuring proposal was only supposed to include 51 Vitamin World store closures. That number has since ballooned up to 124 that are set to be shut down, out of a total 334 locations operating in more than 30 states. The stores that are receiving the ax are being described, as “underperforming and/or unprofitable” by the company.
Following the shutdowns, the remainder are being shopped around and will remain open should they find a buyer in time to provide relief. That is, if the buyer doesn’t turn around and shutter the remaining stores.
As the Vitamin World liquidation carries on, many are bound to be without a job, as the hundreds of stores will likely leave thousands of employees cut from the company.
“We are not going out of business,” CEO Michael Madden reassured customers. “What we are experiencing is happening to many companies in the retail world.”
Vitamin World Filed for Bankruptcy: Planned to Close 51 Stores
The bankruptcy, meanwhile, is undergoing the usual spin from executive.
“This action will empower us to move forward as a stronger organization that can and will continue to service our millions of loyal customers with premium offerings via retail and online channels,” Madden said in a statement.
Restructuring is keeping the business alive for the moment. The company has taken on a $25.0-million bankruptcy loan from Wells Fargo & Co (NYSE:WFC). In total, the company has listed liabilities at around $43.6 million, while assets are estimated somewhere between $50.0 million to $100.0 million.
The company currently employs 1,478 people between its headquarters, stores, and warehouses. That number is certain to fall, however, as the stores across the country close their doors for the last time.
There has yet to be an announcement on just how many job cuts are planned. The company had already closed 45 locations since its purchase in early 2016 by Centre Lane Partners.
The company is also seeking other ways to shore up revenue, like through the sale of its Holbrook office for $16.6 million, instead opting to pay rent. The headquarters houses 100 workers.
The bankruptcy filing claimed that the company’s problems derive from, “significant supply chain and ingredient availability disruptions, a struggling retail market, above-market rents and underperforming retail stores.”
Retail Stores That Filed for Bankruptcy and Closed Stores in 2017
Vitamin World store closures are hardly the only symptom of increasing retail stores bankruptcy across the nation. Many companies are finding themselves struggling with the decreased traffic in malls and the general distaste that consumers are gaining for brick-and-mortar stores, instead electing to shop online via retailers like Amazon.com, Inc. (NASDAQ:AMZN).
Some have even gone so far to dub this the “retail apocalypse” as thousands of stores have closed across the U.S., with many companies that were seen as strong performers suddenly reaching for Chapter 11 protection, not unlike Vitamin World.
Online shopping growth has also led to retail industry layoffs, as companies are seeking ways to be lean and profitable on ever-shrinking margins.
Vitamin World isn’t even the only vitamin store to shut its doors of late, with GNC Holdings Inc (NYSE:GNC), a competitor, shutting 84 stores last year in a massive rebranding effort.
A recent report on the Federal Reserve of New York’s Liberty Street Economics blog reveals that jobs at department stores, such as salespeople and cashiers, have fallen to their lowest levels in decades.
“Why should this be a concern? One reason is that the geographic distribution of jobs is very different for online retailers versus brick-and-mortar outfits,” New York Fed researchers Jason Bram and Nicole Gorton wrote. “In other words, areas that are losing a lot of department store jobs may not be the ones gaining online retail jobs.”
Meanwhile, industry mainstays like Toys R Us Inc and The Gymboree Corporation (NASDAQ:GYMB) have also sought bankruptcy protection, as the online shopping continues to eat a larger and larger chunk of revenue that formerly used to pass through retailer stores and malls across America, meaning that the Vitamin World store closures are hardly unique.
“How Is Online Shopping Affecting Retail Employment?” Federal Reserve Bank of New York, October 5, 2017.
“Vitamin World seeks to close 124 stores, sell off the rest,” Newsday, November 15, 2017.
“Vitamin World Files For Bankruptcy, Closing 51 Stores,” Consumerist, September 12, 2017.
“Vitamin World files for bankruptcy, plans to close 50 stores,” RetailDive, September 12, 2017.
“Vitamin World Closing 51 Stores as it Pursues Ch11,” CoStar Group, Inc., September 13, 2017.
“This dramatic chart shows how the retail apocalypse is affecting jobs across the country,” Business Insider, October 5, 2017.
“Here are the retailers that have filed for bankruptcy protection in 2017,” CNBC, September 23, 2017.