An Unexpected Company in South Carolina Now Files Bankruptcy

July 6, 2024

An unexpected company in South Carolina now files bankruptcy as it seeks a new owner to stabilize its operations, sources report.

Delta Apparel, an apparel retail chain renowned for its Salt Life beachwear and activewear, has filed for Chapter 11 bankruptcy protection.

This move has led to a series of WARN notices being filed with the South Carolina Department of Employment and Workforce, indicating potential mass layoffs across five locations by the end of August.

The notices advised of layoffs in Charleston, Myrtle Beach, Blufton, and Greenville by August 29, “If the company is unable to conclude a suitable transaction, the planned closing will be permanent.”

Delta Apparel’s bankruptcy petition, reported by Bloomberg, listed approximately $337.8 million in assets against $244.5 million in total debt.

The company’s financial struggles have intensified, prompting the need for significant restructuring.

Founded in 2003 by four surfers, the Salt Life brand has become synonymous with beach culture, offering T-shirts and board shorts that capture the spirit of coastal living. Delta Apparel acquired Salt Life in 2013.

Recently FedEx also announced layoffs in the state.

FedEx plans a total of four facility closures, which will affect not just those in South Carolina, but workers in North Carolina as well.

The Ship Center shutdowns coming in September will impact a total of 310 employees, according to WARN notices.

The company is shutting down three Ship Centers in the South Carolina cities of West Columbia, Florence and Myrtle Beach, plus another Ship Center in Conover, North Carolina, as it continues to consolidate its network footprint to save costs and increase efficiency.

FedEx said in an emailed statement to Supply Chain Dive that it will offer some affected employees opportunities at other nearby locations, and the company is providing relocation assistance or severance where applicable.

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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy

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An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.

Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.

Supply Source brands include The Safety Zone and Impact Products.

The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.

Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.

Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products

The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.

However, the company’s financial performance deteriorated in subsequent years.

Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.

The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.

In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.

Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.

The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.

The excess inventory forced the debtor to secure additional storage space, which increased storage costs.

These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.

The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.

The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.

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Also Read: This Massive Mall Retailer Is Now Closing In California

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