Retailer Whose CEO Appeared on ‘Undercover Boss’ Acquiring Near-Bankrupt Forman Mills: Report
Forman Mills will get a second lease on life after the near-bankrupt off-price fashion chain got a deal to be acquired by discount retailer Shoppers World.
The acquisition will save all 43 stores and their employees in Delaware, Illinois, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania and Wisconsin.
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Last week Forman Mills said it was in dire straits after the off-pricer filed WARN (Worker Adjustment and Retraining Notification) notices in Wisconsin and Pennsylvania saying it would go bankrupt if it couldn’t find an acquirer. The notices said the retailer would shut down on Aug. 4 date if it had to file a Chapter 11 bankruptcy petition.
Private equity firm Goode Partners LLC, which was once an investor in contemporary specialty chain Intermix, acquired Forman Mills in October 2016. Private equity firms specialize in leveraged buyouts (LBOs), which saddles a corporate balance sheet with debt. That’s a problem for retailers like Forman Mills when their lower-income shoppers are typically the first to feel the pinch during periods of high inflation. A report from Coresight Research predicted that consumer spending on apparel and footwear could “fade away” this year.
With Shoppers World now behind it, Forman Mills has a far better shot of surviving the current economic cycle where inflation is easing slightly, but the threat of a recession isn’t off the table.
Shoppers World is operated by the SW Group and controlled by the Dushey family. The business was founded in the 1930s as a retailer of children’s goods before expanding to include men’s and women’s apparel and home furnishings and homewares. It has grown to 40 discount department stores in Georgia, Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio, Texas and Virginia and claims to carry the “largest selection of school and work uniforms around.” The retailer says its prices are up to 70 percent less than department stores.
Shoppers World CEO Sam Dushey, grandson of the founder, appeared on the CBS show “Undercover Boss” in January 2016, where he anonymously visited four store locations to gain insight on the inner workings of the business outside of the corner office.
Reports of the Forman Mills sale began circulating over the weekend on local media outlets. “We are pleased to be joining a company with such longevity, strong community roots, and financial stability. I’m happy for our team and our vendor partners,” Forman Mills CEO Mike Kvitko told The Philadelphia Inquirer.
Sourcing Journal has reached out to Shoppers World for comment.
