Sur La Table, the Seattle-based company that built a savory brand around high-end kitchenware and upscale cooking, has filed for bankruptcy protection and will shutter 56 of its 121 remaining locations.
Wednesday’s Chapter 11 filing, which could see the heavily indebted company sold to a New York investment group, comes just two weeks after news that Sur La Table had laid off roughly a fifth of its corporate staff and was considering closures of five retail locations.
The much more extensive measures announced Wednesday are part of a turnaround strategy for a company that has been hammered both by the pandemic and the broader pressures on bricks-and-mortar retail.
The bankruptcy and sale “process will result in a revitalized Sur La Table, positioned to thrive in a post COVID-19 retail environment,” said CEO Jason Goldberger in a company statement issued Wednesday, which listed an affiliate of New York-based Fortress Investment Group as a potential buyer.
The company, begun in a single store in Pike Place Market, has been principally owned since 2011 by Investcorp, a Bahrain-based investment firm.
Although the statement referred to the need for the “closure of certain stores to prosper in the current retail environment,” it offered few details about the scale of the cuts. However, a company spokesman later said that 56 locations would be closed.
The spokesman was unable to say which locations are to be closed, how many employees would be laid off, or when the closures would be completed, but said that liquidation sales were being planned.
With the bankruptcy filing, which had been rumored since May, Sur La Table joins a number of once-potent bricks-and-mortar retailers forced into drastic measures. On Wednesday, apparel icon Brooks Brothers filed for Chapter 11 bankruptcy protection amid ongoing efforts to find a buyer and shutter some 50 stores.
Like many physical retailers, Sur La Table had been hit hard by the pandemic. In March, the company temporarily closed its retail outlets, which had numbered more than 130, according to the company’s LinkedIn page. Although 121 locations would eventually reopen, the “effects of the pandemic” made it necessary to cut staff at its Georgetown headquarters, the company said in late June.
But according to media accounts and other sources, even before the pandemic, the kitchenware retailer had been losing market share to online players such as Amazon. Although Sur La Table had a thriving online business of its own, and also enjoyed success with a line of cooking schools in many of its stores, the physical retail operation as a whole was losing money, according to one former employee.
In May, two of Sur La Table’s creditors indicated they had doubts that the company could repay more than $31 million in senior debt. That fueled rumors that the company was considering seeking bankruptcy protection.
The bankruptcy documents, filed Wednesday in bankruptcy court in New Jersey, indicated Sur La Table has assets estimated at $10 million to $50 million, while liabilities are estimated at $50 million to $100 million.
Rumors of cuts had circulated inside the company for months and had recently spilled onto social media. Still, the scale of the cuts still came as a surprise, the former employee said.
“Fifty six stores? That’s a lot of people. A lot of real estate as well.”