Will Golden Gate be the Right Choice to Turn Around Pacific Sunwear of California Inc?

 Will Golden Gate be the Right Choice to Turn Around Pacific Sunwear of California Inc?On Thursday, Pacific Sunware of California Inc., the retail clothing brand which focuses on youth oriented culture and lifestyle of California, filed for bankruptcy. Its plan includes handing over control to San Francisco, California based private-equity firm Golden Gate Capital expectations that the lender has the recipe to rescue the troubled fashion retailer mainly meant for the teens.

The Anaheim, California based apparel company said that its fashions were not the reason for the financial problems it is facing. It was mainly the costly leases for its stores at the country's malls, which have seen declining traffic over the years.

A combination of reducing traffic and high rents made it difficult for the apparel retailer to handle its $160 million debt which was scheduled to mature at a later period in this year.

Jeff Van Sinderen, a retail analyst at B. Riley & Co said, "The problem is the rent structure. Other retailers have struggled with the same issue-mall traffic is running negative. Some retailers have the brand equity but have to ask, does it make sense to forward with this number of stores?"

Online shopping trend and an increased inclination towards spending on electronics and athletic wear by the teenagers have hurt the profitability of many teen in the last couple of years.

 

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