8-year-old startup Le Tote is bankrupt a year after buying Lord & Taylor and trying to save it from collapse

• Lord & Taylor and its owner, Le Tote, have filed for Chapter 11 bankruptcy.
• Le Tote purchased Lord & Taylor in a $100 million deal last summer, with plans to integrate its rental services and invest in the department store's online business.

Last August, the retail world was shocked when then-seven-year-old clothing rental and resale startup Le Tote forked over $100 million to purchase department store chain Lord & Taylor.

The storied but struggling Lord & Taylor was previously owned by Hudson's Bay. Earlier in its lifetime, it was owned by May Department Stores and Federated Department Stores.

In recent years, Lord & Taylor struggled to keep up with competition from off-price retailers and new startups selling luxury goods online. In 2017, it had sold its New York flagship store to WeWork and shuttered about a dozen other locations.

At the time of the acquisition, Le Tote's leadership seemed optimistic about the potential to turn things around for Lord & Taylor. They said the partnership could end up being mutually beneficial.

"Digitally native brands reach a certain scale where you tap out on those early adopters, and you've got to go and find customers at scale," Brett Northart, cofounder and president of Le Tote, said at the Interactive Advertising Bureau's Direct Brand Summit in November. "Instead of trying to become an offline retailer, we thought it'd be interesting if we could take our prowess, expertise and technology and take Lord and Taylor's iconic brand and loyal customer base ... and bring the best of both worlds to the table."

Northart said that the company's data platform could serve as a secret weapon to fuel Lord & Taylor's growth. Le Tote announced plans to invest in Lord & Taylor's online business, try out different store layouts, and even expand to new locations across the country, all while incorporating its rental business into existing Lord & Taylor stores.

But about a year later, both Le Tote and Lord & Taylor have filed for Chapter 11 bankruptcy.

Lord & Taylor is seeking a buyer for its most profitable stores and could close all of its locations if it does not find one. It has already kicked off liquidation sales at 19 stores in 10 states.

"The economics of running a department store are so punishing," Neil Saunders, managing director at GlobalData Retail, told Business Insider. "What Le Tote should have done is either acquire a more traditional apparel retailer that operates smaller stores, or they should have just simply done their own thing with expansion into the physical space. It really made no sense."

In a message that appeared on its website and in a full-age ad in the Washington Post Monday, Lord & Taylor referred to "the unprecedented strain the COVID-19 pandemic has placed on our business."

"Today, we announced our search for a new owner who believes in our legacy and values," the message says. "This strategy is part of our fierce commitment to preserve a nearly 200-year-old brand that has served local communities and loyal customers for generations."

Le Tote said in a press release: "The Company filed to facilitate and continue a marketing process for both of its business units that began this summer and to efficiently monetize any assets not sold as part of the marketing process. Both Le Tote and Lord + Taylor will continue to operate during the chapter 11 process and offer the same superior service and value."

A spokesperson for Le Tote did not return Business Insider's request for further comment.

The company has about $138 million in debt.

According to court filings, Le Tote has until the beginning of October to submit a bid for court approval. Lord & Taylor, meanwhile, has until mid-October to find a buyer.

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