Franchise Group (FRG), owner of Vitamin Shoppe and Pet Supplies Plus, is filing for bankruptcy.
The company announced a restructuring plan Sunday (Nov. 3), as well as plans to shutter one of its holdings, furniture chain American Freight.
“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings to realize their full potential,” Andrew Laurence, FRG’s president and CEO, said in a news release.
“Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”
American Freight, the company added, has “struggled due to sustained inflation and macroeconomic challenges facing the large durable goods sector.” Store closing sales will begin online and in store on Wednesday (Nov. 5).
Franchise Group went private last year in a $2.6 billion buyout deal led by former CEO Brian Kahn, with the assistance of investor B. Riley.
“We are excited to have this opportunity to continue our business strategy of partnering with high quality franchisees, operators and financial institutions, while also delivering certain value to our public stockholders despite a challenging business environment,” Khan said at the time.
The Franchise Group’s bankruptcy comes at the tail end of a year that has seen a number of retailers seek bankruptcy protection.
By the midpoint of this year, corporate bankruptcies had reached a level not seen since the early days of the COVID pandemic, with most of the companies involved coming from the consumer discretionary category.
Research and reporting by PYMNTS earlier this year found that consumers were scaling back their spending amid higher prices at the grocer and other retailers. It’s a trend that has impacted retailers such as Big Lots, which announced dozens of store closures this summer.
Eventually, Big Lots declared bankruptcy, with PYMNTS arguing that the company’s filing illustrated issues with its business model.
Greg Zakowicz, senior eCommerce expert at Omnisend, told PYMNTS the news serves as a “cautionary tale about retailers without unique offerings that rely on customers spending on discretionary goods.”
Without these offerings, he added, stores run the risk of “becoming disposable” themselves.
“Businesses need something that sets them apart to weather times of consumer belt-tightening and not just exist in a world where they hope a series of small wins turns into something sustainable,” Zakowicz said. “Most of the time it doesn’t — just ask Sears.”
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