In survival mode, Belk cuts debt by nearly $1 billion, gives lenders more control

Belk is unloading more than $950 million in debt and giving some lenders more controlling interests in the company just three years after emerging from bankruptcy .

The iconic Charlotte-based department store’s financial restructuring announced Tuesday also includes securing $485 million in new financing as part of its strategy to strengthen its financial standing.

Belk CEO Don Hendricks called it a “pivotal milestone” for the company’s “sustainable, long-term growth and profitability.”

The privately-owned department store’s “deleveraging transaction” is with the company’s first and second lien lenders, including private equity firms KKR and Hein Park, and private equity owner Sycamore Partners , Belk said in a news release.

Deleveraging typically involves paying down debt, refinancing at lower interest rates or restructuring debt obligations to make them more manageable.

Tuesday’s transaction, which extends the secured lending maturity date to July 2029, saves thousands of jobs and allows the 136-year-old company to expand its national vendor partnerships, Belk said without elaboration.

Belk officials refused to respond to requests for comment, referring to the news release.

Belk has nearly 300 stores in 16 Southern states, and over 20,000 employees.

Three generations of the Belk family led the company to become the biggest family-owned department store chain in the U.S. by 2015, when it was sold for $3 billion to Sycamore.

What the deal means for Belk

Belk is reframing its financial position so it can look forward, Laura Egeln , professor at the College of Business at Johnson & Wales University told The Charlotte Observer.

Because Belk is not public traded, the company’s financial results aren’t public.

“They want to get their financial groundwork in order to move on to their next strategy whatever that might be,” Egeln said.

But Egeln said she’s not surprised by Belk’s financial moves.

Other department stores have been closing stores and struggling, including the largest department store in the world — Macy’s . It plans to close 150 stores over three years to survive.

“The department store and retail world has changed significantly since the family owned it (Belk),” Egeln said.

Steve Cox, professor of marketing at McColl School of Business at Queens University of Charlotte, agreed with Egeln’s assessment

“Given the state of department store year-over-year sales and closure of shopping centers, it is not surprising that Belk’s (Sycamore) has the need for additional capital,” Cox said.

Belk bankruptcy history and CEO changes

The 2015 sale of Belk to Sycamore loaded the chain with over $2 billion in debt as department stores nationwide were losing popularity. In February 2021, Belk filed for and emerged from Chapter 11 bankruptcy the same day.

The bankruptcy plan helped Belk shed about $450 million of debt and gain $225 million in new capital, The Charlotte Observer previously reported.

Sycamore retained majority control of Belk and some creditors, including KKR, gained a minority stake. Belk had more than 20,000 employees, including 1,300 corporate office workers, The Charlotte Observer reported at the time.

In July 2021, Belk said it would sublease its Charlotte headquarters at 2801 W. Tyvola Road as the chain shifted corporate employees to a mix of remote and in-store office work. Belk had signed a 15-year lease on the property in 2016.

Also in July 2021, Belk named a new CEO , promoting Nir Patel from president and chief merchandising officer. He replaced Lisa Harper, Belk’s first female and non-family CEO.

But less than a year later, Patel resigned and Hendricks took the helm in 2022. Belk filed a lawsuit against Patel and his employer GameStop over alleged poaching of high-ranking Belk employees. An undisclosed settlement in the suit was reached by November 2022.

Other Belk business moves

Since its bankruptcy, Belk has implemented other new strategies, including partnering with other stores

and adding its own outlet stores.

In 2022, Belk debuted its partnership with a Texas home goods store Conn’s , joining a strategy among other retailers adding shop-in-shop concepts.

Last year, Belk debuted its first outlet store in Tennessee selling clearance items from larger stores. Belk now has 17 outlets in 11 states, according to the company website.

North Carolina’s first Belk outlet store will open in September at Northlake Mall in Charlotte, converting the upper level into an outlet store with the lower level remaining as a regular Belk store.