David’s Bridal Needs To Find A Buyer To Survive

Wedding retailer David’s Bridal is courting potential investors with a proposal that is crucial to its survival. It needs to convince them to say “I do” to the purchase of the 73-year-old company.

David’s Bridal filed for bankruptcy protection April 17 and warned that although it remains in active discussions with potential bidders, it will be forced to close its stores if a buyer isn’t found.

While David’s has a lot to offer – it is the country’s largest bridal retail chain, with a national footprint of close to 300 stores and a market share of 25-30% – its previous bankruptcy, and market trends, could make this a tough sell.

This is the second time in five years that the company has filed for bankruptcy. When it filed previously, in November 2018, it was able to emerge from bankruptcy in just two months, with funding from a new group of owners, led by Oaktree Capital.

New management acted swiftly to modernize the company’s image, improve its omnichannel capabilities, and add new technology. But was hit by Covid and other unexpected costs that burned through the cash it needed for its turnaround plan.

A bigger problem for David’s Bridal, however, may be the shifting attitudes, and shopping habits, of today’s brides.

CEO James Marcum, in an interview, sounded almost as confident about the future possibilities for David’s Bridal as he did in 2019, soon after he took charge of the company.

The overwhelming majority of brides look at David’s Bridal at some point in their wedding journey, putting the company in an enviable position, Marcum said.

The company has “90% on brand awareness; 85% to 90% of all actionable brides in America will come through our funnels at some point; between 25% and 30% market share,” he said. “I don’t know of any other retailer positioned quite like this.”

In addition to having access to nearly all of the prospective brides, David’s Bridal, he said, has attractive assets including a unique vertical supply chain with valuable manufacturing and sourcing relationships, its own design studio, and “tremendous IP” including brand names like Oleg Cassina and Galina Signature.

Diamond and Pearl initiatives

David’s Bridal also has seen a very positive response to two of its newest initiatives, the Diamond loyalty program, which has over 2 million active members, and the Pearl wedding vendor marketplace, which launched in January and already has over 20,000 participating vendors and over 1 million listings.

Marcum said he is encouraged by the number of interested investors exploring a purchase. “There are a lot of parties engaged,” he said. “The obvious goal here is David’s will be here for future generations to come.”

He said he expects the timeline for identifying if a strategic sale is possible to be relatively short. “We’ll know a lot in four to six weeks,” he said. “It’s not a long time period.”

Marcum said the top priority with the bankruptcy filing has been to ensure that all wedding dress orders will be filled, and to reassure brides to continue to order from David’s Bridal.

“Our whole focus on those first day motions was to get all the constituents – the judge and everybody – to agree the most important thing in these processes is to give confidence to the customer that we’re going to fulfill every single dress,” Marcum said.

David’s Bridal stated in court filings that while it hopes to sell the company as a going concern, it simultaneously is preparing for an expedited shut down of the business, with store closings and liquidations, should a buyer not be found.

Because of that possibility, or the chance that a new owner may opt to close some stores, David’s had to issue federal WARN notices alerting all store employees that they could be laid off within 60 days.

Impact on consumer confidence

David’s learned with its last bankruptcy that news of a bankruptcy, even with a rapid emergence and successful restructuring, can hurt future sales. Loss of consumer confidence in David’s “significantly eroded David’s Bridal’s liquidity forecast following emergence,” the company said in court documents.

In his declaration to the court in support of the bankruptcy petition, Marcum said Covid-related store closings and wedding postponements hurt the company’s revenues. But he also acknowledged that trends toward more casual weddings, and the growing popularity of vintage and thrift-store wedding dresses have cut into David’s sales.

Marcum said in the interview that the impact of all of the weddings postponements in 2020 is still being felt today, despite reports of a surge in weddings in 2022.

As weddings were delayed for a year or more, brides had a harder time finding venues, and the planning time for weddings increased, he said. “We’ve been facing an elongation of this planning cycle,” he said. “It used to be you got engaged, within nine months you were done. Now you get engaged, and its 16, 18 months. so we’re kind of caught in this little lull,” he said,

Inflation and economic uncertain also is pushing brides to scale back wedding plans or have more casual weddings, he said.

Changing styles

Another obstacle David’s facing is competition from online bridal retailers, as millennial and Gen Z brides become increasingly comfortable with conducting their search for a dress, and the purchase, entirely online.

Online bridal shop Azazie, which launched in 2014, saw its revenues grow by 180% year-over-year in 2021, and 130% in 2022. This year, the site is selling dresses at an average rate of 5,000 a day. It also has seen 1,000% growth in special occasion dresses, according to the company. It recently expanded to sell in Canada, Europe, Mexico, and Australia.

“Bridal retail in general has evolved so much over the last five years,” said Ranu Coleman, Chief Marketing Officer for Azazie, “When I started working for Azazie in 2018 it was much, much harder to convince a bride to shop for something like a bridal gown online.”

“What we hear a lot is the more modern brides don’t want to feel the pressure of a salesperson telling them what to buy,” Coleman said. Brides have also told Azazie they like being able to try on a dress at home, rather than share a mirror in a store with two or three other brides, she said.

“There’s also been a casualization of a wedding dress,” Coleman said. “It’s not so much that huge ballgown style,” she said. “The customers’ needs have changed. It tends to be a little bit easier as an online retailer to create more of those styles and stay on top of those trends,” she said.

Marcum remains convinced that David’s Bridal, with its stores, has an edge that makes it the only truly omnichannel retailer in the wedding dress industry.

“There’s no doubt about it, there’s a component of the market that goes online,” he said. David’s does a large part of its bridesmaid dress sales online, he noted. But most brides, Marcum said, still want to deal with a physical store when they buy their dress.

For wedding dresses, only 10% of David’s sales occur online, with those orders typically placed after the bride has visited a David’s store, he said. “Why is that? – Because, for her dress, she wants to make sure it’s altered and right,” he said.

Now, the question for David’s Bridal is will the right buyer or buyers say yes?