Intermix Asking Brands for Deep Cuts on Their Outstanding Payments on Current and Future Merchandise
Under new owners Regent L.P., Intermix has been asking brands to take a steep cut in what they’re owed on current merchandise and future orders through the second quarter, wreaking havoc on some small brands that were expecting payments, WWD has learned.
Brands began complaining in November that Intermix had paused payments when the retailer was experiencing financial problems. Last week, WWD reported that Intermix was sold to private equity firm Regent L.P., and that 60 employees were let go, according to informed market sources.
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WWD has now learned that Intermix has asked some brands for a 50 percent reduction on outstanding payables on current merchandise and a 50 percent discount on future orders for the first and second quarters. Intermix did not respond to a request for comment Friday.
Several brands contacted declined to discuss the offer on the record, but were clearly upset about the predicament. One brand owner said that Intermix isn’t even offering to give the merchandise back for their own direct-to-consumer channels and sold thousands of units on markdown.
That source said that Intermix is not taking care of its vendors, particularly small vendors that were expecting those funds from merchandise they shipped back in October, and the payment terms were clear. The brand owner feels this move will put a lot of brands in a bad financial position, and does not reflect a good partnership. “You don’t want to build a business in today’s culture if you’re putting people out of business. Pay the bills and cut the deals for the future,” said the vendor.
The source speculated Intermix is testing their loyalty, hoping that if they agree to the terms and business turns around by the third quarter next year, the vendor would be in good stead. However, if they refuse the offer, they might end up in court suing Intermix for what they’re owed, and then they will never be carried again.
Gary Wassner, chief executive officer of Hilldun Corp., the factoring firm, said he’s heard from several of his clients that Regent is asking for a 50 percent discount on payables currently owed, as well as future orders through the second quarter. “What I’m hearing is the response is ‘No.’ Those who have contacted me said it’s not feasible,” said Wassner.
Wassner said that Hilldun’s clients are covered, but others in the market, if they don’t have factor or credit insurance, have a decision to make. “It’s up to the brands to make their independent decisions,” said Wassner.
“It would be a shame for the company [Regent] not to move forward. My belief is we need stores like Intermix in the market. They have to come up with a viable plan in order to move forward,” Wassner said.
According to one financial source, the big problem Intermix had was massive corporate overhead, which they accumulated under Gap ownership. “There’s need for a store like Intermix. There’s no Barneys and we need a showcase store. Half of their business was online,” the source said.
Intermix carries brands such as L’Agence, A.L.C., Cinq a Sept, Altuzarra, Retrofete, Victoria Beard, Ronny Kobo, Farm Rio, LaQuan Smith, Frame, AGoldE, Jonathan Simkhai, Ulla Johnson, Sam, LoveShackFancy, Zimmermann, Jimmy Choo and more.
Jeff Rudes, chief executive officer of L’Agence, said his brand is a top-five brand at Intermix and his business is strong there. “Our finance team said we could be shipping them by the end of the year,” said Rudes. The company had stopped shipping Intermix in early November.
He said Intermix hasn’t come to his firm with the 50 percent offer. He said he believes that only those brands which are heavy with inventory and don’t have good margin results have been approached.
“It’s a reorganization. We have to work with the new organization so they could be profitable. If they have goods that aren’t turning, people have to be responsible for that,” he said.
He said Regent has to have a long-term plan and that he believes the firm is trying to turn all that inventory that’s not turning. For some brands, he said, it makes sense to take that offer because to sell the merchandise to a T.J. Maxx or another discounter and with all the paperwork and shipping costs is not worth it.
“People have a decision to make. It’s different for every vendor. This 50 percent is the worst,” he said. “This is one of those times that if Intermix has a good plan, they should get the support from everybody. Intermix has a lot of good history. Business is not that great. The top five are doing 75 percent of the business.”
He said a lot of the brands “are not carrying their weight in a bad market.”
He said he believes that if the retailer can come back and shrink the business, “Intermix is a powerhouse and will always be.”
Karen Katz stepped down as interim chief executive officer of Intermix last month, and was replaced with James Rushing as interim CEO.
Reports were circulating in the market last week that Altamont Capital Partners had sold Intermix to Regent L.P. A spokeswoman for Intermix said Dec. 3 that a formal announcement to the press wouldn’t be coming out about the sale. But informed sources have confirmed it’s a done deal.
