A Hudson Valley online clothing retailer says tariffs, a decline in consumer confidence, and onerous financing deals have led it to file for bankruptcy protection.
Casual 21 USA Corp., of Woodbridge, Sullivan County, estimated assets up to $50,000 and liabilities between $1 million and $10 million, in a Chapter 11 reorganization petition filed on Aug. 15 in U.S. Bankruptcy Court, Poughkeepsie.
“Despite my best efforts,” Chief Financial Officer Asher Horowitz stated in an affidavit, “the decline in revenue coupled with increased loan debt resulted in insurmountable financial strain, compelling me to seek bankruptcy protection.”
Casual 21 sells clothing and accessories online through Amazon and Walmart. It carries brands such as New Balance, Betsey Johnson, and Steve Madden. It employs 9 people.
Horowitz’s daughter, Chanie Horowitz, founded the company in 2020, owns it, and is the chief executive officer.
Asher Horowitz cited several strains on the business. For instance, products made in China were not shipped because of increased tariffs. Amazon and Walmart tripled the costs of storage and shipping.
And he did not “truly understand how onerous” merchant cash advances – a type of financing where future revenues are pledged in exchange for a lump sum payment – could be.
Casual 21 owes more than $2 million in secured and unsecured debt for merchant cash advances and traditional loans, according to bankruptcy schedules.
Meanwhile, the company is cutting costs.
Customer service, marketing and inventory management have been outsourced to a company in the Philippines, enabling Casual 21 to eliminate a job and a contractor. It is paying less than half of what it used to pay Amazon and Walmart for advertising, by moving to a company that uses artificial intelligence to identify customers.
Casual 21 is liquidating about $1 million in inventory in products that did not sell well. After this year’s holiday season, inventory will be shifted to a new place that will cost $450,000 less per year than what Casual 21 spends on its own warehouse.
Horowitz expects sales to increase significantly as Target, and possibly Kohl’s and Macy’s, sell Casual 21 products online.
The company has sufficient business and opportunities to reorganize and emerge from bankruptcy successfully, he stated in the affidavit. “However, emergency relief is necessary to protect the value of the business as a going concern.”
