The decrease in foot traffic to malls claimed yet another victim: Vitamin World has filed for bankruptcy and outlined plans to close dozens of stores.
Vitamin World filed [PDF] for voluntary Chapter 11 bankruptcy Monday, setting in motion a plan to reorganize the company and reduce its store portfolio by 51 locations.
According to the bankruptcy filing [PDF], Vitamin World’s troubles were related to a “significant supply chain and ingredient availability disruptions” along with “above-market rents and underperforming retail stores.”
In order to turn around its business, Vitamin World — which currently operates 334 stores in malls and outlet malls around the country — plans to close 51 stores during the bankruptcy proceedings.
The company began the process of closing these stores on Sept. 8 by selling off their inventory. It expects to reject leases for the underperforming stores on Sept. 30 and close the locations shortly after.
Vitamin World says that it intends to evaluate the leases for other underperforming stores in the coming months with the aim to renegotiate the rent of those locations. If those talks are unsuccessful, the company warns that it will be forced to reject those leases as well, resulting in additional store closings.
As the vitamin and supplement retailer traverses through the bankruptcy process, it intends to remain operational.
To do so, the company will receive a $25 million bankruptcy loan from Wells Fargo. The financial infusion will allow the company to continue paying its 1,478 employees.
It Was Coming
Monday’s filing wasn’t exactly a surprise. CEO Michael Madden announced last week that the company had made the decision to restructure through bankruptcy.
“We are not going out of business,” Madden reassured customers. “What we are experiencing is happening to many companies in the retail world.”
Vitamin World’s issues came to a head this year, as the company continued to transition to a new owner. Last year, private-equity firm Centre Lane Partners purchased Vitamin World from Nature’s Bounty for $25 million.
During the transition period, the company shuttered 45 underperforming stores; a move that saved approximately $2 million.
In further attempts to avoid bankruptcy, the chain’s new owners worked to negotiate new lease terms with landlords, Madden noted. However, those talks were unsuccessful, leading to the company’s decision to close some stores and file for bankruptcy.