David’s Bridal just got a $55 million lifeline to stave off a second bankruptcy

David’s Bridal has been open since 1950. Business Insider/Jessica Tyler

David’s Bridal’s lenders have come to its rescue again.

The bridal gown retailer announced Monday that it received a $US55 million cash injection from its lenders to enable it to invest in future growth. Moreover, its lenders have agreed to exchange $US276 million of debt loans for company stock, which leaves it with a significantly reduced pot of debt at $US75 million.

The company filed for Chapter 11 bankruptcy protection in November, after struggling for several years as shoppers increasingly shifted toward more casual wedding dresses. In 2018, the credit-rating agency Moody’s downgraded David’s Bridal, citing falling traffic and same-store sales over the previous two years.

“In our view, this is a reflection of the intense competition in the sector and casualization of both gowns and bridesmaids dresses,” Raya Sokolyanska, a Moody’s analyst, wrote in a note to investors at the time.

While it had made an effort to adapt to the trend, a fleet of lower-price competitors such as Anthropologie, H&M, Asos, and Reformation have swooped in and taken market share, and experts say the market is now oversaturated with options.

In an interview with Bloomberg on Monday, CEO James Marcum said the capital injection and debt-to-equity swap “eliminates a ton of question marks and gives us the ability to focus on the future.” The company plans to use the capital to invest in digital marketing to reach new customers, he said.

While David’s Bridal had been insistent to its customers that despite its bankruptcy in November it was still business as usual from their perspective, Marcum said that some shoppers had been spooked by the news, and competitors had swooped in and taken advantage.