Body Central Corp. went out of business over the weekend, a stunning reversal for a 42-year-old Jacksonville company that was seemingly on its way to huge success less than three years ago.
The fashion retailer decided Friday to close down its remaining 265 stores and sell off the inventory. The stores were scheduled to be closed for good by Sunday night, according to an attorney for the company.
“The company searched for capital to support a reorganization as a smaller, viable company, but no investors could be found,” said Gardner Davis of Foley & Lardner in Jacksonville, who represented Body Central in its effort to reorganize.
Body Central announced Wednesday it may have to file for a Chapter 11 bankruptcy reorganization because of severe liquidity problems, after it received a notice of default from a group of investors who held $18 million in convertible notes.
Instead, the company announced Friday it had entered into an Assignment for the Benefit of Creditors with a firm that handles liquidation and workouts for troubled firms.
The Assignment for the Benefit of Creditors is an alternative to a federal court bankruptcy filing, essentially a “state court bankruptcy liquidation,” said Davis.
“The assets will be liquidated under the process, with the proceeds distributed to creditors,” he said.
Body Central assigned its business over to Michael Moecker & Associates, a Hollywood, Fla., firm that specializes in workout situations.
Body Central was founded by Jacksonville residents Jerrold and Ronnie Rosenbaum, who opened their first store in the Roosevelt Mall in 1973 under the name Body Shop.
The Rosenbaums grew the business into a chain of 175 stores before selling a controlling interest in 2006 to a group of investors led by WestView Capital Partners.
Body Central grew to 204 stores by October 2010 when WestView took the company public with an initial public offering of 5 million shares of stock at $13 each.
The IPO was a success, with the company reporting strong sales growth and plans to significantly expand the store base.
The stock reached a high of $30.93 in May 2012 before a disappointing sales forecast sent the stock down. That was followed with a series of poor financial reports that sent the stock tumbling.
As the company reported its sixth straight quarterly net loss, its stock fell by 97 percent last year.
Body Central had 294 stores in operation at the end of 2013 but began closing down poor performing stores in 2014, and had planned to close 50 more this year.
With the company retrenching instead of expanding, it cancelled plans last year to move its headquarters and distribution facility from a 179,000-square-foot facility at 6225 Powers Ave. on the Southside to a 400,000-square-foot facility at One Imeson Center in North Jacksonville.
The City Council had approved $1.39 million in city and state incentives to assist the company’s move.
During the company’s struggles over the last two years, Body Central twice brought in new CEOs.
Allen Weinstein, who was chief executive when the company went public, resigned in August 2012 after sales started to fall. He was replaced in February 2013 by Brian Woolf, who announced his resignation in November as the company failed to rebound.
Woolf was replaced by Ben Rosenfeld, who outlined plans to return the company to its roots as a “sexy brand” appealing to teenage and young adult women.
“The company hired a very talented young CEO in November. Unfortunately, the company couldn’t find the financing to execute its turnaround strategy,” said Davis.
Body Central is not the only fashion retailer catering to young women that has run into financial trouble recently. Just last week, Wet Seal Inc. said it was closing 338 of its 511 stores, including its two Jacksonville locations. The Wall Street Journal reported Friday that Wet Seal hired restructuring lawyers for a possible bankruptcy filing.
Delia*s Inc. began liquidating its stores after a Chapter 11 filing in December and Deb Shops, which also filed for bankruptcy in December, began a going-out-of-business sale last week.
“Body Central is not unique,” Davis said.
Still, Davis expressed disappointment that Body Central was unable to successfully reorganize.
“This is a great tragedy because the company has 2,500 loyal, hard-working employees who are losing their jobs,” he said.
Body Central’s stock was still trading on the OTC Pink Sheets Friday afternoon after its midday announcement of the Assignment for the Benefit of Creditors.
The stock, which was trading near $1 before its Wednesday announcement, fell 8 cents to 18 cents on Friday.
Body Central said in a Securities and Exchange Commission filing after the market closed Friday that “stockholders are not expected to have any recovery in the liquidation.”
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