The parcel carrier, many of whose clients are large retailers, was hit hard by a holiday shopping season that “fell far short” of expectations, according to court filings with the U.S. Bankruptcy Court in Newark, N.J.
Parcel carrier EZ Worldwide Express has filed for chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Newark, N.J.
The Elizabeth, N.J.-based company, which counts large retailers like Amazon.com Inc., Forever 21 Inc. and the Disney Store as clients, said it was hit hard by a holiday shopping season that “fell far short” of expectations.
EZ Worldwide Express said that because it primarily services in-store retail sales, the shift toward online e-commerce this year was particularly damaging for the company, which had recently spent $12 million expanding its trucking fleet and facilities.
“Although the retail industry in general had a satisfactory season, the balance between in-store retail sales and online sales tipped dramatically towards online sales and direct-consumer delivery,” President Ajay Aggarwal said in the court papers. “Since our businesses serve primarily in-store retail sales, we suffered accordingly.”
Aggarwal said the 700-worker company typically takes in 40 percent of its $50 million in yearly revenues during the fourth quarter and nearly half of its income comes from fashion retailer Forever 21, which last year used EZ Worldwide Express as the exclusive delivery service for its 150 stores.
The National Retail Federation said last week that holiday season retail sales increased 3 percent to $626.1 billion compared to the previous year, falling short of the 3.7 percent growth NRF predicted back in October.
NRF attributed the slower growth rate primarily to “unforeseen weather events across the country and an extreme deflationary retail environment.”
Non-store holiday sales – i.e. online sales – however, grew 9 percent to $105 billion compared to 2014.
“Make no mistake about it, this was a tough holiday season for the industry. Weather, inventory challenges, advances in consumer technology and the deep discounts that started earlier in the season and that have carried into January presented stiff headwinds as retailers competed with one another and their own bottom line,” said NRF President and CEO Matthew Shay. “Despite these factors, the industry rallied, consumers responded and sales still grew at a healthy rate, which is a huge testament to the resilience, knowledge and expertise of our retail leadership.”
“A double whammy of deflation and December weather constricted holiday sales growth as well as consumer spending,” added NRF Chief Economist Jack Kleinhenz. “The results of December’s retail sales remind us just how significant of an impact unusual weather can have on retail and overall economic activity.
“While the timing is uncertain there are positive prospects for improvement, including recent job gains that will help lift income and earnings, and a healthy housing market that should provide some support for spending in various retail sectors.”
EZ Worldwide Express files for bankruptcy
