GREENSBORO, N.C.-- — David's Bridal, the nation's leading bridal and special occasion wardrobe retailer, may be on the verge of filing for bankruptcy. All signs point to that after the company skipped an October 15 interest payment on a $270 million loan.
Failing to make a debt payment is often a precursor to filing for Chapter 11 bankruptcy protection, according to a story in USA Today. History says missing a major payment is usually a warning to creditors that the company is barreling toward a restructuring effort of some kind.
The Conshohocken-based chain provides wedding gowns to 1 in 3 U.S. brides through more than 300 stores nationwide, including in Greensboro and Winston-Salem. It is also a go-to destination for bridesmaids and prom dresses.
Local industry experts say they're not surprised to hear the wedding dress retail giant is experiencing financial challenges.
"You do see some bride's moving towards the small bridal shops because they do have a more high-end selection sometimes than even David's Bridal has even though it may cost a little bit more," said Shayla Sharpe, a Wedding and Events Specialist.
Sharpe is the co-owner of Sharpe Pursuits Inc., a full-service event company located in Greensboro. She says industry trends have been reflecting a shift towards online retail.
Social media has also given brides direct access to independent designers and dressmakers who can customize or draw inspiration from more expensive dresses by big-name designers.
"Every business is having to re-structure because of social media and because of online shopping and things being a lot easier to do from home," added Sharpe.
One Greensboro bride says while the news is shocking to her, it is a reflection of the times.
"When I think of this possibility of stores closing or bankruptcy it shows what's going on in our nation in terms of businesses," said Rashunda Stitt whose bridesmaids dress are from the retailer.
"Every business is having to re-structure because of social media and because of online shopping and things being a lot easier to do from home," added Sharpe.
A David's Bridal spokesperson tells WFMY News 2 the missed payments a "strategic decision" and insists that as it looks to improve its balance sheet, day to day operations will not be affected.
FULL STATEMENT: Our financial outlook is strong and we have ample liquidity to meet our key business objectives today and in the future. With the assistance of our financial and legal advisors, we are engaged in discussions with our lenders in order to reach a mutually agreed upon resolution designed to strengthen our balance sheet so we can increase our financial flexibility and further invest in our business. As we continue this process, we have made the strategic decision not to make an interest payment due October 15, 2018. This does not mean discussions will not continue. In fact, discussions with our lenders are continuing in good faith and have been constructive.
We do not expect this process to materially impact our business or interfere with day-to-day operations or our relationships with vendors and customers. The Company is laser-focused on operational excellence to grow revenue and margins, providing a great experience for our customer base and unlocking the value of the Company for all of our stakeholders.
The S&P Global Ratings flagged the October 15 missed payment and lowered the company's credit rating, according to a press release.
The company has a 30-day grace period to pay, although S&P said it's "highly likely" that won't happen.
In August, the company acquired Blueprint Registry, a digital-first, universal gift registry that allows consumers to add gifts from any retailer, import existing registries and create cash registries.