Commerce Owner of Papaya Clothing Files for Bankruptcy

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Cornerstone Apparel Inc., the Commerce-based owner of teen retailer Papaya Clothing, filed for bankruptcy in U.S. bankruptcy court in Los Angeles last week.

The privately held company said in its filing that it grew too fast, opening about 50 out of 80 stores in the past six years. The company opened its first retail store in 1999.

“The high cost of expansion combined with decreasing store sales as a result of a general industry-wide shift in consumer shopping preferences from in-store to online shopping, and the resulting increased competition, has left Cornerstone with insufficient liquidity to meet all of its financial obligations,” the company said in its filing.

The company occupies a 75,000-square foot headquarters in Commerce, which includes a warehouse and distribution center. It employs about 1,300 people and generated more than $134 million in sales last year. Cornerstone said its clothes are made in the United States, in contrast to most fast-fashion retailers, which produce clothes overseas.

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