Spa Sydell, a prominent Atlanta retail brand that was hit hard during the economic downturn, has emerged from bankruptcy with a new owner.
Founded in 1982 by Sydell Harris and her family, the chain was battered by the recession as customers cut back on day spa services such as facials, manicures and massages. It filed for Chapter 11 bankruptcy in September 2009 when it listed $4.3 million in debts and $5 million in assets.
The new owner and chief executive officer is Reina Bermudez, 46, a business executive with a beauty industry background. Bermudez was brought in to serve as Spa Sydell's chief financial officer in 2007 by former chief executive Richard Harris. He will stay on as a consultant.
Sydell Harris will serve as an honorary board member in the company and will still be active in the spas.
Bermudez said the company's six spa locations now operating will stay open. An expansion of services and possibly stores are coming. She would not provide details of what is planned.
Looking back to the bankruptcy filing, "The problem was the economy," Bermudez said. "We're a luxury item. The economy blindsided us."
Sydell Harris said unemployment took a toll as clients came less often for services, spreading out their visits.
Bermudez said the bankruptcy bought time for the firm to reorganize and eventually emerge. A key to the reorganization was renegotiating store leases to lower rates. The bankruptcy filing listed $2.25 million in unsecured debt and, of that, $743,000 was for leases.
"When these leases were created the market was different," Bermudez said. "[Property owners] brought these locations to market value."
Richard Harris said that Spa Sydell stores have "always been a draw," attracting shoppers who visit neighboring retailers. This makes them attractive to property owners.
"We're a destination," he said. "We bring in clients. Our property owners want us there."
Bermudez said she had not envisioned taking over the company, but that it was "the best possible outcome for the company." She said she was attracted to the business, in part, because of her love of spas.
"That's what I do for my vacations," she said. "This is my passion. I enjoy it."
