Jacksonville-based Stein Mart has filed for Chapter 11 bankruptcy, saying it “expects to close a significant portion, if not all, of its brick-and-mortar stores.”
Stein Mart announced Wednesday morning it has launched a store closing and liquidation process. Stein Mart filed n the U.S. Bankruptcy Court for the Middle District of Florida – Jacksonville Division.
Stein Mart expects to be able to maintain the payment of employee wages and benefits without interruption during the company’s wind down.
It’s also evaluating alternatives that include the potential sale of its e-commerce business and related intellectual property.
“The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business. The Company has determined that the best strategy to maximize value will be a liquidation of its assets pursuant to an organized going out of business sale. The Company lacks sufficient liquidity to continue operating in the ordinary course of business. I would like to thank all of our employees for their dedication and support,” said Stein Mart CEO and CFO Hunt Hawkins in a statement.
The bankruptcy filing was expected. In a June filing with the Securities and Exchange Commission, the company wrote: “Our management has determined that there is a substantial doubt about our ability to continue as a going concern over the next twelve months.”
In June, Stein Mart said it was exploring is the sale of the company, according to the report. But an earlier attempt at a cash infusion failed in April when a planned stock buyout by Kingswood Capital Management, L.P. fell apart, also due – at least in part – to the pandemic.
At the end of the first quarter of 2020, Stein Mart had 281 stores across 30 states, including six stores in Jacksonville.
According to WJCT News partner the Jacksonville Daily Record, as of mid-April, the company was furloughing most of the 8,600 employees in its stores and in its supply chain and cutting about half of the 375 employees in its corporate office.
The company dates back to 1902, according to Reference for Business. It was founded by Sam Stein, a Russian immigrant who opened his first store in Greenville, Miss.
Jake Gordon is the CEO of Downtown Vision. He commented Wednesday on Stein Mart's bankruptcy on First Coast Connect with Melissa Ross, in a wider discussion about Downtown Jacksonville's growth.
He pointed out how the COVID-19 recession, which has decimated Stein Mart, is different than the recession of 2008. "Stein Mart has had its challenges in the past. I did see that news this morning. I think, you know, it's different than 2008. I think, you know, in that situation people didn't have a lot of money in terms of institutional investors. The stock market was tanking. Everything was going down. The reality is there's still money to be invested right now,” Gordon said.
To hear the entire interview with Gordon, listen to Wednesday’s First Coast Connect with Melissa Ross here on WJCT.org. The show also encores at 8 p.m. on WJCT News 89.9.