Frederick's of Hollywood reportedly plans to file for bankruptcy protection and sell the company to the highest bidder. For now, Frederick's will operate as an online-only retailer, according to its website, with the chain closing all its remaining physical stores. In February, Great American Group was hired to liquidate a third of Frederick's 93 locations.
The shift from a struggling brick & mortar to online-only follows the path of Montgomery Ward, Linens-N-Things, Service Merchandise and, most recently, Delia*s.
Ron Friedman, an accountant and consultant at Marcum LLP, believes Frederick's could be profitable online if they're able to use social media to drive the web traffic the stores used to provide.
"An online business is nothing more than another retail store without fixed rent," Mr. Friedman told the Los Angeles Times.
But The Wall Street Journal reports that a new buyer could soon arrive with other plans. Frederick's, owned by Harbinger Group since 2013, has the terms of a purchase agreement drafted with a proposed buyer as part of a bankruptcy filing, according a report. Any deal would face a bankruptcy action in which others could bid for the business and would need court approval.
While the new buyer could bring back some stores, wholesale could also be an option. In 2011, Iconix Brand Group acquired Sharper Image and now sells Sharper Image products at Lord & Taylor, Macy's, Kohl's, Bed, Bath & Beyond, Target and elsewhere as well as sharperimage.com.
Frederick Mellinger founded Frederick's in the late 40's by bringing the black lingerie, push-up bras and thong underwear he saw in Europe during World War II to the U.S. It began as a mail order catalog but soon began opening stores — including a flagship on Hollywood Boulevard — and continues to flaunt its racy lingerie. Eventually, competition arrived from Victoria's Secret and designers bringing a more refined approach to sexy intimate apparel. Frederick's first filed for bankruptcy in 2000 when it had 200 doors.