The company that introduced the push-up bra has really let itself go: Sales have sagged for years, losses have mounted for the better part of a decade and, now, Frederick’s of Hollywood has filed for bankruptcy protection.
But the iconic lingerie retailer has already found an admirer, one that plans to hawk Frederick’s diminished assets online.
New York brand development and licensing company Authentic Brands Group – a portfolio company of West L.A. private equity firm Leonard Green & Partners – has agreed to purchase the slumping undie brand for $22.5 million and keep the company going as an online retailer, according to Frederick’s Chief Operating Officer William Soncini in a declaration included in the company’s April 19 Chapter 11 filing.
Other potential buyers will have a chance to bid for Frederick’s over the next month.
Authentic Brands couldn’t be reached for comment and representatives from Leonard Green declined to comment.
In its bankruptcy filing in Delaware, Frederick’s reported poor sales, increasing expenses and difficulty paying back debt. The filing capped a few tumultuous months for the company, which in December lost the lease on its flagship store in Hollywood and in February announced that it would liquidate about one-third of its 93 stores. Then, earlier this month, before filing for Chapter 11 protection, Frederick’s announced that it would close all of its stores and operate only as an online retailer.
Bankruptcy filings show the company has assets of just $36.5 million, but debt and other liabilities totaling $106 million, much of it owed to suppliers and landlords.
Frederick’s was founded by push-up-bra pioneer Frederick Mellinger in 1946 as a mail-order lingerie business and opened its first retail store in Hollywood the following year. At its height, the company operated as many as 200 stores and its wares were modeled by the likes of pin-up girl Betty Page.
But the decades haven’t been kind to Frederick’s, as the company failed to keep up with competitors, most notably shopping-mall mainstay Victoria’s Secret.
Soncini said in his declaration that Frederick’s hasn’t been profitable since 2007, the same year the company filed for bankruptcy the first time around. The company had been purchased in a leveraged buyout in 1997, but the deal left Frederick’s with too much debt.
Frederick’s merged with a subsidiary of Movie Star Inc., a wholesaler of women’s intimate apparel, creating publicly traded Frederick’s of Hollywood Group Inc. Shares traded for a few years on the New York Stock Exchange before the company was delisted.
Frederick’s went private again a year ago after being acquired by its current owner, New York investment firm HRG Group Inc., formerly Harbinger Group Inc., in a deal estimated at $25 million.
