Frederick’s: More Store Closings, Departures

The recent announcement that Frederick’s of Hollywood is in the process of reducing the number of retail locations to around 60 is but one of several important changes that have occurred since the once publicly trade firm was taken private last May. A count of the stores listed on the company website indicate about 82 store are now in operation, down from 94 last May and 135 as of February, 2008.

In July, CEO Thomas Lynch left after about five and a half years at the company and after it had been announced he was going to remain with the firm for three years after it was taken private.

In going private, Frederick’s was acquired by Harbinger Group Inc., which, at the time, was controlled by billionaire Philip Falcone. But at the end of 2014, Falcone announced he was leaving Harbinger, and not long after Harbinger disclosed in a SEC filing that “we changed the strategic direction of Frederick’s” saying this “was the direct result of the resignation of the Company’s CEO,” adding that the departure “triggered goodwill and intangibles impairment tests. The tests resulted in total impairments of $60.2 million to goodwill and the intangible assets.”

Bill Soncini, now COO at Frederick’s, reported the current store closings in a recent interview with The Wall Street Journal, adding that Great American Group is handling going-out-of-business sales at the locations that are being eliminated, and that “These stores should have been closed years ago.” Soncini did not respond to telephone and email request for further clarification about all the changes and future direction.

Harbinger, now known as HRG Group Inc., is a large holding company which registered $5.96 billion in sales for the 12 months ending September 30, 2014. Operations include insurance, capital asset management, consumer products and energy.

Before it went private, for the 12 months ending July 27th, 2013, Frederick’s reported $86.5 million in sales.