Showfields Inc. has filed for bankruptcy and has lined up financing to support a restructuring, WWD has learned.
The company did not disclose the amount of the new funding, which came from existing investors. The new money will be used for completing the sunsetting of the two stores closed earlier this year, paying outstanding bills, increasing marketing and expanding the Brooklyn store, which continues to operate, among other purposes revolving around the restructuring, Tal Nathanel, chief executive officer and cofounder of Showfields, told WWD.
Showfields continues to operate its store at 3077 M Street NW in the Georgetown section of Washington, D.C,. as well as the store in the Williamsburg section of Brooklyn, at 187 Kent Avenue.
Showfields will be restructuring through the Small Business Reorganization Act, Subchapter V, a form of Chapter 11 bankruptcy devised during the COVID-19 era to help small businesses keep operating, reorganize, and maintain control of their finances without creditors taking over.
“Bankruptcy is a very wide concept. We are utilizing subsection five, a tool that allows small businesses that don’t have a lot of debt to gain control of their finances,” Nathanel said.
About a year ago, Showfields started examining the possibility of launching stores in Europe. Despite the restructuring, that plan is still on the table, Nathanel said.
The four-and-a-half-year-old Showfields doesn’t operate with a wholesale model, and doesn’t buy product. Instead, for brands to display in the store, the company charges a fee based on the scope of the presentation. A brand could display two or three skus and get charged the lowest rate, or a few dozen skus for a fuller statement, and get charged the highest rate. Showfields overhauls the merchandising every six months with a new assemblage of brands.
Showfield’s Miami store, at 530 Lincoln Road, closed in July, and its Manhattan store, at 11 Bond Street along Lafayette Street in the NoHo neighborhood, closed in September. Some employees were able to take other jobs within the company, but under 20 employees, mostly part time, had to be let go, according to the company.
Nathanel said the 11,500-square-foot Brooklyn store will be expanded by about 2,500 square feet to accommodate brands relocating to the site from the two stores that were closed.
“Our mission has been to lower the barriers of entry into retail for brands. It’s not changing,” Nathanel said.
Asked what caused the two closings, Nathanel replied, “The pandemic was a very big factor in accelerating the inherent problem of retail, which is the lack of flexibility” revolving around costs and leases. “But it’s important to take responsibility. Did we execute everything perfectly? No. But I am very proud of our business model and our investors. We have learned so much. The leases in Brooklyn and D.C. reflect what we learned from signing the other leases. They have better terms because they offer us flexibility, price components based on performance and exit windows for both the tenant and the landlord.”
The three-level, 20,000-square-foot Showfields in Washington, D.C., is located on the site of a former Brooks Brothers store. It opened in December 2022. The three-level, 11,500-square-foot Brooklyn store opened in November 2022. Nathanel said both stores are profitable.
“We also learned that brands are highly focused on ROI. For us, that means launching campaigns that are more affordable. We need to show them more sales. But experiencing all the hardships of retail has made me more of a believer than ever that for the problems we are striving to solve for hundreds of brands, our business model is a real solution and has the right to exist.”
He said that many of the brands displayed at Showfields need to be in Europe, on high streets to grow their businesses. “We do have a city in mind. I can’t disclose it yet,” Nathanel said.
“It pains me to leave our NoHo and Miami stores, but we see great things ahead,” Nathanel said in a prepared statement. “While it took us a few years to fine-tune, today, we know the right economic structure for new locations, as we have shown in our newest stores. We remain dedicated to our mission of redefining the way people discover and experience retail.”
To create the kind of retail experience he felt was lacking, in March 2019, Nathanel — with real estate developer Amir Zwickel and Katie Hunt, a marketer and cofounder of The Fund venture capital firm — launched Showfields. Overall, the assortments tend to be built around wellness, home, food and beverage, beauty, ready-to-wear, accessories and tech brands that are not widely distributed and displayed amid unconventional adjacencies decor and oversized sculptures and artwork.
In March 2022, Nathanel told WWD the company raised $20 million with Hanco Ventures, Swan and Legend Ventures, MUFG Capital and some other sources, for expanding the company.