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We may still be collectively debating whether a recession is here in the US, or will ever be, but for British luxury retailer Paul Smith, which just shuttered its three standalone boutiques in Germany, the culprit is clear, WWD reported.
The retailer, which has been operating in the country for the last 10 years, has witnessed Germany’s economy shrink post-Covid and ultimately became the only European nation hit by recession.
“The leases for our shops in Germany were all negotiated pre-Covid when shopping habits were vastly different from today,” a Paul Smith spokesperson told WWD. “The decision to close shops is never easy particularly given the dedication and efforts of all of our local staff.”
While luxury as a whole has suffered as inflation tightens its grip and consumer spending dips, some fashion retailers have had a harder time than others.
For instance, Showfields, a New York-based lifestyle retailer that sold fashion, jewelry, and home accessories, filed for Chapter 11 bankruptcy in October 2023, after facing declining sales and rising debt since before the pandemic.
Likewise, Scottish fashion label Christopher Kane was reportedly seeking new buyers as it urgently looked to refinance its debt, and ultimately struck a deal with the brand’s original founders last July.
Then there are others, like David’s Bridal and Scotch & Soda, which both filed for bankruptcy last year, citing mounting debt or issues with cash flow.
Although both companies were acquired by other firms, the series of fashion bankruptcies and store closures in the last year alone may indicate a troubling pattern.