Retail group in bankruptcy crisis ditches strongest brand to stay afloat

Daily Mail​

23-04-2025

A major retail group will sell its strongest brand as it struggles through the bankruptcy process.
The Franchise Group, which owns businesses such as Pet Supplies Plus, Badcock Home Furniture and Buddy's Home Furnishings, is set to sell its prized possession - The Vitamin Shoppe.
The franchise filed for Chapter 11 bankruptcy protection in November last year as it faltered under $2 billion in debt.
At the time of filing, Franchise said bankruptcy was necessary to protect its best performing brands. But less than six months later the company has etched out a deal to sell The Vitamin Shoppe.
The group's best known brand will be sold off to private equity firms Kingswood Capital Management and Performance Investment Partners for $193.5 million.
Next month the company will seek approval from a judge for its reorganization plan, which includes the sale.
The Vitamin Shoppe, which sells a range of health and beauty products, has 650 stores across the country.
The 50-year-old brand has remained successful despite the woes of its parent company, and announced expansion plans as recently as 2023.
'We are excited to partner with The Vitamin Shoppe team and help them build upon the success the business has enjoyed over the last forty-eight years,' Kingswood Partner Michael Niegsch and Performance Investment Partners Mark Genender said.
The Vitamin Shoppe has invested in its brick-and-mortar stores in recent years, including launching its store-within-a-store concept which features wellness goods from local sellers.
The company also launched a telehealth service called Whole Health Rx last May.
The wellness economy was valued at $6.3 trillion in 2023, and could even reach $9 trillion by 2028, according to The Global Wellness Institute.
The Franchise Group is just one of many companies which have filed for bankruptcy in recent years - including popular restaurant chains and healthcare companies.
As part of Franchise's restructuring, the company called time on its American Freight furniture chain and closed all 357 of its locations.
The chain, which counts Wayfair and Big Lots as rivals, sold beds, mattresses, sofas, fridges, ovens, ranges and dishwashers.
Franchise Group blamed the bankruptcy on a post-pandemic sales slump as stimulus funds dried up and inflation-weary consumers cut back on spending.
The business also suffered in the wake of a federal probe into its CEO Brian Kahn.
Kahn was investigated for his dealings with the firm that had taken Franchise Group private in August 2023.
Franchise Group claimed in its filings that the situation had scared off possible partners that might have helped with a rescue deal.
Franchise Group's 'operating businesses, and primarily American Freight, continued to encounter headwinds driven by the macro-economic and other factors,' David Orlofsky, Franchise Group's chief restructuring officer, said at the time.
'Together with the allegations against Mr. Kahn, adversely impacted Franchise Group's ability to sell or otherwise monetize any of its other businesses,' he explained.
Other traditional health giants have failed to compete with the rise of medical breakthroughs such as Ozempic and Wegovy.
WeightWatchers has plans to file for bankruptcy in the coming months as it struggles under the weight of $1.6 billion in debt.
Many of its former customers are turning to a new generation of weight-loss drugs that help them shed pounds with far less effort.