David's Bridal is filing for bankruptcy
Posted November 19, 2018 11:58 a.m. EST
(CNN) — David's Bridal has been buried under a mountain of debt. It hasn't helped that fewer people are tying the knot lately.
The nation's largest bridal retailer filed for Chapter 11 bankruptcy protection on Monday. It owes between $500 million and $1 billion to creditors, according to court records.
As part of the bankruptcy, David's Bridal reached a deal with lenders to reduce the company's debt by more than $400 million. The agreement will allow David's Bridal to continue to operate its more than 300 stores.
Unlike Alfred Angelo, which shut down last year without telling soon-to-be brides, David's Bridal customers won't be affected by the bankruptcy. Wedding dresses will arrive on time and bridal appointments won't be impacted, the company said.
"While David's Bridal used to be the dominant force in bridal outfitting, it gradually became less relevant," said Neil Saunders, managing director at GlobalData Retail."David's Bridal is a classic case of a retailer with too much debt and a challenged business model."
In 2012, a private equity firm bought David's Bridal for more than $1 billion. The high level of debt the company had to take on under the deal left it little room to invest in its digital business or marketing. David's Bridal skipped an interest payment last month.
David's Bridal also got battered by changes to the wedding dress industry. The company makes most of its sales from bridal gowns and bridesmaids' dresses, but a shift to more casual weddings made the company's traditional dresses and gowns less appealing, analysts say.
Sales and traffic have both fallen at David's Bridal, according to Moody's.
Upstart competitors such Floravere, Anomalie, and Urban Outfitters' Anthropologie also undercut David's Bridal.
"Retailers like Anomalie offer a much more modern and exciting service, which allows brides to create bespoke gowns," Saunders said. "Newer entrants feel fresh and contemporary. By comparison, David's Bridal appears stuffy and old-fashioned."
David's Bridal has also been hurt by the declining marriage rate in the United States. The number of marriages per 1,000 Americans fell from 8.2 in 2000 to 6.9 in 2016, according to the most recent CDC data.
"Cohabitation in lieu of marriage is increasingly culturally accepted," Moody's analyst Raya Sokolyanska said in a research report last year. "Couples pay down student debt and other obligations and pursue careers first."