After years of struggling to recapture its glory days, the former Wilsons Leather announced Thursday it is going out of business.
Now known as PreVu Inc., the Brooklyn Park-based specialty retail chain said it has been unable to obtain the capital or financing needed to continue its plan to turn its 100 mall stores into accessories boutiques.
The Wilsons Leather name will live on in outlet malls, however, at least for the time being. Wilsons sold its name, website and all 116 outlet locations to New York-based clothing company, G-III Apparel Group Ltd. for $22.3 million in July.
Wilsons had hoped the deal with G-III, known mostly as a supplier of brand-name apparel, would provide the much-needed capital to remodel its stores and to give lenders confidence that the once-busy retailer could pull out of its free-fall.
Employees around the country heard the news in a conference call Thursday morning, said a store manager who didn't want to be identified talking about corporate matters.
Company officials did not return phone calls seeking comment.
Most stores closed their doors immediately following the conference call, but the airport locations may stay open longer, according to the manager. All the merchandise will be sent to a liquidator.
The company said in filings with the Securities and Exchange Commission that it expects to complete the liquidation process by the end of October.
It's unclear whether the chain has enough money to pay off the mall leases it has signed or whether it's headed for bankruptcy court.
"At the end of the day, there were just too many negatives to overcome," said Eric Beder, an analyst with Brean Murray, Carret & Co. in New York, who covered Wilsons until earlier this year. "Leather is a tough business. It's so seasonal. The economy had to break right for them, the concept would need to be outstanding -- and even then it would have been difficult."
Thursday's announcement was the end of a slow decline for the retailer, which got its start in 1899 when three brothers opened up a fur, wool and leather hide business in downtown Minneapolis.
In the past decade or so, Wilsons has seen its corner on the market for designer leather clothing eroded by mass-market stores, such as Costco, Kohl's, Target and Wal-Mart. Despite infusions of more than $80 million from equity investors over the past four years, the company never regained its footing.
Recent economic woes accelerated the company's demise, as consumers worried more about paying for gas, housing and groceries than picking out a new handbag. Retailers nationwide say sales of jewelry and accessories have taken the biggest hit.
During the past year, the retailer shed nearly all of its Wilsons-brand outerwear and was trying to reinvent itself with splashy fashion photos, bright lights and airy displays of designer handbags. But even in good times, retailers face long odds when trying to start up a new concept to bring in new customers.
Wilsons stock, which nearly reached $24 in 2001, was trading for pennies before the company was delisted by Nasdaq on Aug. 4 for failing to keep shares and stockholders' equity above minimum requirements.
"I didn't see it coming," said the store manager, who said he has worked at the company through many ups and downs over the years. "They pitched this new concept hard, and really made us believe in it. That's why many of us stuck with the company instead of finding different jobs."
Jackie Crosby • 612-673-7335