David's Bridal files for Chapter 11 bankruptcy protection, aims to stay in business

Nathan Bomey | USA TODAY

Show Caption Hide Caption Brides are saving major money by shopping for wedding dresses online Online retailers, offering more options at lower prices, are hurting traditional wedding retailers, including industry giant David's Bridal.

David's Bridal, the nation's largest wedding retailer, filed for Chapter 11 bankruptcy protection Monday with plans to stay in business.

The company is saddled with hundreds of millions of dollars in debt from a private-equity buyout several years ago and faces a surge of digital competition.

David's Bridal assured customers that its bankruptcy would not disrupt their weddings – in part because it secured support from key lenders to stay alive. It expects to continue operating more than 300 stores and its website.

"Orders will arrive on time and bridal appointments will not be impacted," the retailer said.

Another wedding retailer, Alfred Angelo, left brides and grooms in a lurch in 2017 when it suddenly liquidated.

David's Bridal said it won't suffer a similar fate.

"For more than 60 years, David's has delivered beautiful, high-quality dresses and accessories for our customers' most special occasions, and the actions we are taking will enable us to build on that tradition," David's Bridal CEO Scott Key said in a statement. "Our team is laser-focused on providing brides and their families with the five-star service and experience they deserve and have come to expect from us."

USA TODAY reported in October that David's Bridal was teetering on the edge of bankruptcy after missing a key debt payment.

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The company is grappling with a decline in spending on wedding dresses, as more brides choose alternatives, including cheaper ones online, and couples wait longer to get married.

The average price paid for a wedding dress fell 3.5 percent to $1,509 in 2017, according to TheKnot.

The retailer filed what's known to restructuring experts as a "prepackaged bankruptcy," which typically means the reorganization process is negotiated ahead of time with creditors who stipulate that the debtor will enter Chapter 11.

With support from certain lenders locked in, David's Bridal said it hopes to finish its bankruptcy by early January and emerge with $400 million less debt.

David’s Bridal still sells about 1 in 3 U.S. wedding dresses, according to market research firm IBISWorld. The company also sells prom dresses and other wedding items.

The chain projected 2018 revenue of $721 million and earnings before interest, taxes, depreciation and amortization of $75 million, according to a court filing.

Since David's Bridal's product suppliers will get paid in full, there's little reason for engaged couples to worry, said Angelo Thalassinos, senior legal analyst for restructuring research firm Reorg.

The "vast majority" of the company's stores are profitable when factoring out debt payments, said Mark Fischer, director of credit research for Reorg.

"This is about realigning the debt and the capital structure with the company’s operations and not about aggressive store closings," Fischer said.

The trend of Americans waiting longer to get married, or deciding not to altogether, has hurt David's Bridal. The number of new marriages per 1,000 Americans was 6.9 in 2016, down from 8.2 in 2000, representing a decline of about 16 percent in the wedding rate, according to the U.S. government.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.