Delia’s, Coldwater Creek Live on After Stores Close

Here at Bankruptcy Beat, we’ve become quite familiar with going-out-of-business sales. But lately, closeout sales haven’t been the final chapter for some failed retailers.

As The Wall Street Journal examines this week, entrepreneurs and investment firms are snapping up the intellectual-property rights to retailers that have fallen on hard times, taking advantage of a built-in audience to launch lower-cost small businesses online without the overhead of maintaining dozens or hundreds of locations.

But capturing enough attention with online- and catalog-only strategies can be difficult, retail analysts say, and longtime customers of a particular brand will be quick to flee if they don’t see the kinds of products they grew to love.

The types of stores getting revived online are varied, from teen retailer Delia’s to lingerie chain Frederick’s of Hollywood to much-beloved women’s retailer Coldwater Creek. All filed for bankruptcy in the last year and a half and shut down stores.

New York businessman Steve Russo and a group of co-investors are preparing to relaunch Delia’s as an online- and catalog-only store as soon as the end of July, after buying the retailer’s intellectual property and customer lists for $2.5 million.

He thinks the brand is strong enough to survive and even thrive in a leaner format, because he believes the brand still appeals to young girls and moms looking for clean, age-appropriate fashions.

A key part of the chain’s possible appeal is its social-media following. The new owners are leveraging Delia’s some 340,000 Instagram followers to get the word out about the new operation. In March, they posted photos of models in Delia’s clothes with taglines like “Don’t believe the rumors! You just might be surprised!” and “The Internets have spoken! We are coming BACK!”

Such comebacks can be initially confusing at times for shoppers who saw a beloved store shut down in the local mall.

Longtime Coldwater Creek shopper and Philadelphia-area resident Karen Staub said she was surprised to find a Coldwater Creek catalog in her mailbox in March. “I was like, hmm, where’d this come from?” Ms. Staub, 63, said recently. “Then I got another one, and I realized they were back in business.”

Ms. Staub said she’s going to look carefully at the new Coldwater Creek products before ordering. “If the description for the pants looks familiar to me, I would try it,” she said. “But I’ll have to see what the quality’s like.”

Would you shop at a favorite store that goes online-only under new ownership? Tell us what you think in the comments, and check out the full story on the comeback of Delia’s, Coldwater, and the others.

Write to Sara Randazzo at [email protected]. Follow her on Twitter at @sara_randazzo