The company said a number of factors went into the decision, including a liquidity shortfall as a result of credit market volatility and general economic conditions, which, in turn, have impacted the company's store opening plans and borrowing capacity.
Officials said as part of the process, the company is moving forward with operational improvements and exploring a potential sale of the company to repay outstanding debt. 172 corporate and field staff positions have been cut in the move.
In a statement, officials commented on the recent success of its stores, including an overwhelming response to a line of clothing from actress Sarah Jessica Parker.
"Unfortunately, in the current credit and economic environment, this has not been enough," the statement read. "High costs of materials and fuel prices have increased our cost of goods and cost of operating. Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases. The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords, and to our company. It has become increasingly difficult for us to continue operating normally under these circumstances."
More information about the company's financial problems can be found in the July 1 Turner Report.