Struggling fashion chain closing 100 stores to avoid bankruptcy | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

As a number of retail chains have gone out of business after Chapter 11 bankruptcy filings, people often blame the Covid pandemic. In many cases, that’s accurate because the pandemic-related shutdowns forced companies to take loans at unfavorable rates.

Once stay-at-home orders ended, business did not recover enough to service that added debt. You can directly attribute the death of dozens of local restaurants, bars, and breweries to this cash crunch.

In other cases, it’s not quite as simple, Forever 21, for example, likely had its cash position harmed by the pandemic, but its death was hastened by falling consumer interest. It’s incredibly hard for fashion brands to remain relevant as tastes change.

Some companies like The Gap have managed to survive the highs and lows. At times, the company’s namesake brand has been in style and has carried the load. In other cases, the company’s Old Navy brand has been the retail brand driving profits.

Countless retailers have filed for Chapter 11 bankruptcy and not recovered, eventually having to liquidate. You could build an entire mall with ’80s, ’90s and ’00s clothing brands that no longer exist.

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Merry Go Round, Bon-Ton, Lord & Taylor, The Limited, Loehmann’s, Bonwit Teller, Chess King, and Anchor Blue are just a few once-successful clothing retailers that no longer exist.

Now, a once-trendy fashion/clothing retailer finds itself having to make massive cuts and shut down hundreds of stores in a fight to avoid bankruptcy.

Clothing retailers can often get stuck with inventory consumers don’t want.

Image source&colon; Hanna Lassen/Getty Images

Fossil faces an uphill fight

It’s a massive challenge for a brand to reinvent itself once it’s no longer hot. In some cases, a chain may have a core customer base that sustains it during periods where it’s not as popular (think Vineyard Vines), but in others, not being cool leaves a brand without a customer base.

Fossil has been a hip fashion and clothing chain, but it has struggled recently.

For the full year, the company saw sales drop by 18.9% to $1.1 billion. The company did not try to sugarcoat the drop.

“The sales decrease was largely driven by overall category, consumer, and channel softness,” it shared.

Retail and restaurant bankruptcies:

Fossil did cut its loss from $143 million to $103.9 million for the year.

The chain has a long history, but a pretty complicated mission statement.

“We believe that when you surround yourself with people and things you love, you find beauty in every moment and make memories that shape your story. Since 1984, we’ve been inspired by American creativity and ingenuity. Our goal is to bring new life into the industry by making quality, fashionable pieces. We are authentic to our roots, and creative in our style. We are optimistic in our spirit, and generous in our joy,” it shared on its website.

That sounds nice, but it does not mean much.

Fossil has a turnaround plan

Fossil closed 50 stores in 2024 and has plans to cut roughly the same amount in the coming year. The retailer shared a turnaround plan with three key focus areas:

Refocusing on our core through key initiatives, including launching a new Fossil brand platform, leveraging our core licensed brands, optimizing our global wholesale footprint and driving channel profitability.
Rightsizing our cost structure.
Strengthening our balance sheet.

Those are pretty basic goals, and the company did share some specifics.

“As part of the turnaround plan, in full year 2025, the company expects to achieve SG&A savings of approximately $100 million versus 2024, resulting from a corporate workforce reduction, the transition of select international markets to a distributor model, and the closure of approximately 50 Fossil retail stores,” it shared.

CEO Franco Fogliato commented on the turnaround plan in prepared remarks released along with the company’s fourth-quarter earnings.

“During my first six months in the CEO role, we moved swiftly and took a number of pivotal actions to set up the business for long-term success while formulating a comprehensive turnaround plan,” he shared.

The CEO also acknowledged the challenges that lie ahead.

“We are clear-eyed about the amount of work required to execute this turnaround and we are energized by the opportunity in front of us. We have tremendous optimism and confidence in our ability to propel the business forward, fueled by our core foundational assets — iconic brands, innovative design, global reach, and talented teams,” he added.