Charlotte icon Belk to file for bankruptcy

Why it matters: The pandemic has wreaked havoc on brick-and-mortar retailers, especially ones like department stores that were already struggling with slipping sales.

• Belk joins a growing list of retailers that have filed for bankruptcy in the last year, including J.C. Penney, Neiman Marcus, Tuesday Morning and Pier 1 Imports.

Zoom out: Belk was founded in Monroe in 1888 and grew over time into the largest family-run department store chain in the nation. In 2015, private equity firm Sycamore Partners bought Belk for $3 billion. [Go deeper]

On Tuesday afternoon, Belk said in a statement that it plans to file for Chapter 11 bankruptcy. This deal includes an agreement with Sycamore Partners and a group of Belk’s lenders “to recapitalize the business” and trim its debt by approximately $450 million.

• The deal includes an infusion of $225 million from Sycamore to keep Belk’s operations going.
• Lenders including KKR Credit and Blackstone Credit will become minority partners in Belk.
• Belk anticipates the deal will close at the end of February.

What it means for customers: Belk’s operations will continue as normal, spokeswoman Jenny Anderson said. The company does not anticipate any layoffs or store closures as a result of the restructuring.

Belk has “struggled to find its footing” in recent years, Queens marketing professor Steven Cox told me a few months ago.

Despite investments in its digital shopping experience, Belk’s had to close stores (like a flagship location in Dallas) and cut its staff over time. Last summer, Belk laid off an undisclosed number of employees at its corporate offices on Tyvola.

• Last week, the Wall Street Journal reported that Belk’s lenders aimed to avoid bankruptcy while restructuring the company.

Roger Beahm, a marketing professor at Wake Forest University, says Belk’s bankruptcy filing is not surprising. He actually thinks it’s encouraging. Think of the infusion of new capital from Sycamore as a steroid that’ll let Belk continue to run stores and pay vendors, Beahm said.

• Unlike other challenges Belk has dealt with, the pandemic and its impact on sales are outside Belk’s control, he added.

“Belk has been such an important citizen in our community in the Carolinas. Giving them the chance to continue to do business and to survive through all of this is critical,” Beahm said. “Belk, if they can weather this storm, will be a factor for a long time.”

Get smarter, faster on the most consequential news unfolding in your own backyard with our newsletter. Subscriber here.