Aeropostale Inc (OTCMKTS:AROPQ) will continue operating 400 stores as part of a last-minute deal.
The deal came from mall owners that agreed to reduce the cost of rent at 171 of the chain’s stores. This will allow those locations to continue to operate. It also saves the jobs of about 5,300 employees working for the clothing retailer.
A previous deal was already made that had Simon Property Group Inc (NYSE:SPG) and General Growth Properties Inc (NYSE:GGP), two mall owners, working with Authentic Brands to acquire Aeropostale for $243 million. This deal saved 229 of the retail chain’s 720 U.S. stores. It also let 7,000 employees keep their jobs.
“There is nothing wrong with Aeropostale, but you have to get the rents and the overhead under control,” Jamie Salter, CEO of Authentic Brands, told New York Post. “This is a new way of thinking about retail.”
The decision by Simon Property Group, General Growth Properties and Authentic Brands to save Aeropostale is likely part of an effort to keep mall traffic up at a time when more people are going online for their shopping needs.
The deal to save Aeropostale stores was approved by U.S. Bankruptcy Judge Sean Lane. The auction for the retailer’s assets was held on Sept. 2, which was roughly four months after it had filed for bankruptcy.
Sycamore was also interested in buying Aeropostale after it went bankrupt. The retailer owed it $151 million and this was its reported bid for the company. However, AROPQ fought back by claiming that the private equity firm was partly responsible for it going under.