– EN Fashion – Diesel USA has filed for Chapter 11 bankruptcy protection from creditors after reporting losses for a number of years.
The company filed the claim at a US Bankruptcy Court in Delaware on Tuesday (05Mar19), citing falling sales, high rents, theft and cyber-fraud as the main causes of its financial problems.
Operating losses at Diesel USA increased from $4 million in 2014 to $ 27 million in 2015. In 2018, the company had an operating loss of $24 million.
CBS News reported that Diesel USA chief restructuring officer Mark Samson noted the company was unable “to sustain the kinds of losses it has suffered in recent years”.
Despite the money struggles, the much-loved denim and accessories brand has insisted it will continue to operate throughout the process, with plans to close 28 stores so it can invest in its online and wholesale proposition.
In a statement issued on Wednesday, Diesel reps said they were addressing “long-term liabilities” to create a “healthier and stronger” U.S. business.
“This procedure opens the way to a redefinition of the brand’s geographic footprint in the United States, a strategic roadmap that will include some important milestones in 2019,” they said.
The long-term plan includes refitting and reviewing most of the line’s retail store network, strengthening its e-commerce presence, and instigating a series of key wholesale partnerships to enhance the way that consumers interact with the brand, both physically and digitally.
While parent company Diesel S.p.A., founded by Italian designer Renzo Rosso, will not be affected by the bankruptcy, it confirmed plans to continue operating in the U.S. market going forward.
“The company remains fully committed to the U.S. market, a unique and fundamental window to be an important player globally,” bosses commented.