Opera, the Bulgari-backed investment fund, bought a controlling stake in Bruno Magli SpA in 2001. U.S. sales account for 50 percent of the company’s estimated $82 million in total annual sales, according to Aaron Schwartz, president of Bruno Magli North America.
The Chapter 11 petitions for three related entities — BM USA Inc., Uomo Magli Texas Inc. and Donna Magli Texas Inc. — were filed in a bankruptcy court in Plano, Tex. The filing affects U.S. retail operations only and is not expected to impact either the wholesale or international businesses.
According to court papers, all three entities are operated by the same corporate parent, Bruno Magli SpA, which owns an 87 percent stake in BM USA. Donna Magli and Uomo Magli are wholly owned subsidiaries of BM USA. The cases are expected to be consolidated under the Donna Magli case file.
As a result of the filing, the firm has shuttered four of its seven U.S. stores, including a three-level 5,000-square-foot unit at 789 Madison Avenue here, which opened last June. The other three boutiques shut down are South Coast Plaza in Costa Mesa, Calif., Short Hills Mall in Short Hills, N.J., and a shop at 677 Fifth Avenue here.
Asked if there are plans to shut down the remaining three retail locations, Schwartz said, “At this time we don’t anticipate it. But certainly with the provisions that were allowed under the reorganization plan, we’ll take the time to strategically evaluate each location.”
Court documents said that, shortly after entering into some of the lease agreements, the firm encountered liquidity problems, with the four shuttered unprofitable locations each costing the company between “$1 million to $2.5 million per year simply to operate.”
The firm said in court papers that it lost $2.5 million in 2003 just from the operation of the store on Fifth Avenue. That lease was for space in the basement, ground and second floors. The Madison Avenue store lost $1.9 million last year, while South Coast Plaza lost $1.4 million. The Short Hills store lost $1.2 million last year.