Silk apparel cataloger WinterSilks filed for Chapter 11 bankruptcy protection on July 31, after its primary lender, American National Bank and Trust Co. of Chicago, refused to underwrite its holiday campaign.
Chris Vig, president of the Middleton, WI-based WinterSilks, says the filing will allow operations to continue while the mailer looks for a buyer. Although Vig claims several companies have expressed interest, he couldn’t identify potential buyers. In the meantime, according to the Wisconsin State Journal, Graham Webb International, a haircare products manufacturer that also owns the California Style catalog, has agreed to buy out American National’s $4.2 million loan to WinterSilks and is willing to lend the cataloger another $2.3 million to keep it afloat. Vig points to the $34.8 million WinterSilks’ 1996 spin-off, Silk Collection, as the source of much of the mailer’s financial strife. “About 80% of our recent cash shortfall can be traced to Silk Collection,” he says. Vig explains that as WinterSilks repositioned the new catalog to become more upscale, it continually gained new inventory. But the new merchandise was slow to catch on. In February, WinterSilks discontinued the catalog. The mailer’s current debt amounts to approximately $7.1 million, he says.
Silk Collection’s year-round apparel line was intended to reduce the mailer’s dependence on the holiday and winter sales seasons, and its failure left the company vulnerable to another hazard: El Nino. “The warmest winter since 1857 caused WinterSilks’ sales to be off about 11%,” Vig says.