Brookstone, the struggling retailer known for its consumer gadgets, massage chairs and other home furnishings, filed for Chapter 11 bankruptcy protection on Thursday, with plans to sell itself to the owner of the Spencer’s retail chain for about $147 million.
The filing caps a challenging period for Brookstone, which has laid off workers and closed stores amid a decline in sales. The company, which is privately held, said that it lost $18 million in the 13 weeks ended Sept. 28, compared with a loss of $12 million in the period a year earlier.
Brookstone now hopes that a combination with Spencer Spirit Holdings will provide a path toward profitability. Under the agreement with Spencer Spirit, Brookstone will continue to operate its stores in malls and airports, as well as its catalog, website and wholesale business, under the Brookstone brand.
The agreed purchase price includes $120 million in cash, $7.5 million in new notes and about $18.5 million of assumed liabilities, a spokeswoman for Brookstone said.
Still, it is not certain that the bankruptcy process will go as planned. Blucora, the owner of the online electronics retailer Monoprice, is considering a rival offer for Brookstone, a person briefed on the matter said on Thursday. Blucora’s interest was reported earlier by The Wall Street Journal.
Brookstone, based in Merrimack, N.H., said in its bankruptcy filing that it had up to 5,000 creditors. The company estimated that its liabilities were as high as $500 million. It had just $1 million in cash as of Sept. 28., the last time it reported earnings.
From its origins with a classified ad in Popular Mechanics magazine in 1965, Brookstone enjoyed success for decades by selling a range of consumer products through its catalogs. It opened its first retail store in 1973 and, as of last fall, operated about 260 stores in the United States and in Puerto Rico.
The current owners â€" Osim International, a publicly traded Singaporean company; Temasek Holdings, the Singapore government’s sovereign wealth fund; and J.W. Childs Associates, a private equity firm â€" bought Brookstone in 2005.
Not long afterward, its business struggled as consumers cut back on spending and online retailers posed a growing threat.
“The retail industry continues to evolve and staying ahead of the curve is critical,†James M. Speltz, Brookstone’s president and chief executive, said in a statement on Thursday. “A partnership with Spencer Spirit provides us the canvas upon which to sketch our next chapter.â€
Spencer Spirit sells through two primary brands: Spencer’s, which sells humorous and racy gifts, and Spirit, which sells Halloween costumes. Both are mainstays of malls, with stores in the United States and Canada.
Brookstone, as it goes through a reorganization, is receiving legal advice from K&L Gates and financial advice from Deloitte, while Jefferies is advising on its sale. Spencer Spirit is being advised by the law firm Cole Schotz and PricewaterhouseCoopers.
