March 2009 Archives

M.W. Sewall, the New England company that runs Clipper Marts throughout Maine, has filed for bankruptcy. The company, which dates to 1887, has no plans to close stores while restructuring. M.W. Sewall operates 15 Clipper Marts on the Maine coast and runs an oil-and-propane delivery service as well.

Online retailer Home Decor Products is closing all nine of its businesses. The company filed for Chapter 7 bankruptcy Thursday and has begun liquidating assets. Home Decor, which had more than $83 million in sales last year, considered but rejected a Chapter 11 filing that would have kept the business operational.

Home Decor Products' sites, including HomeClick.com, AbsoluteHome.com, Barbecues.com, PoolClick.com, are not accepting orders, and the sites have a variety of messages posted on them, from goodbyes to "temporarily for browsing only" announcements. The corporate web site at HDPI.com has been taken offline.

Restaurant chain Tumbleweed filed for bankruptcy protection in Kentucky. The company and its franchisees run 40 restaurants in Kentucky, Indiana, Ohio and overseas. All Tumbleweed Southwestern Grill outlets are continuing to operate during the restructuring.

• In Indiana, Chronister Pharmacy is losing its last outlet. This location has been active for 58 years, and has gone from being a family-run business to a division of Kroger. Customers are being directed to Walgreen's.
• Bromberg & Co., a 110-year-old jeweler in Birmingham, Alabama, has closed its 46-year-old retail store in reaction to the economy.
• Midwestern men's retailer Al Baskin has filed for bankruptcy and closed its Mark Shale store. It is keeping three Chicago stores open and closing all of its out-of-state locations in April.
  

While the turmoil at Dial-A-Mattress has concluded, woes in the bedroom and home goods businesses continue elsewhere. In Indiana, TBO LLC was placed in receivership and its 16 stores shuttered earlier this week. The stores, such as Today's Bedroom One, The Mattress Gallery and Today's Kids, have been closed since Tuesday; the parent company hopes to reopen eight Mattress Gallery locations once court proceedings have concluded.

Meanwhile, Hendricks Furniture is strategically closing stores, including two in North Carolina and all its Florida locations.

Chocolatier Lindt & Sprüngli is closing 50 of its 80 U.S. retail outlets in reaction to a sales downturn. The company, which sells Lindt chocolates and also owns Ghirardelli, is moving to a mall-based retail plan. Lindt's woes do not match those of the greater chocolate industry; competitors such as Nestle are doing well in the current market.

The fashion world, rocked by the sharp slowdown in retail sales the past six months, is now struggling to stay afloat. In-demand menswear designer Thom Browne is struggling to find a financial backer and battling a drop in retailers' orders for his $5,000 men's suits. The fashion house may have to file bankruptcy if backing is not found soon.

Meanwhile, mass marketeer Marc Ecko is refinancing hundreds of millions of dollars of debt. The lack of liquidity in the financial markets suggests Ecko may have to divest some of its business lines in order to meet the debt obligations.

Southern grocery chain BI-LO Supermarkets filed for bankruptcy with nearly $1 billion in outstanding debt. The company has 215 stores across the Carolinas, Georgia and Tennessee. BI-LO expects to continue operating during bankruptcy proceedings. BI-LO spinoff Bruno's also filed for bankruptcy earlier this year.

When local governments act like corporations, what happens? Jefferson County, Alabama, for one, home to Birmingham, is billions of dollars in debt.

Two commissioners in Jefferson County are pressing the county to file for bankruptcy court protection, as the county grapples with about $4 billion in debt related to a controversial series of bond transactions earlier in the decade.

This is a strange one. Dial-a-Mattress, infamous for their late-night commercials, saw sales fall to $100 million, from $170 million two years ago, and now:

Creditors filed an involuntary Chapter 7 bankruptcy petition against Dial-a-Mattress last week, seeking $1.7 million. The company is seeking to convert that to a Chapter 11 reorganization.

Sleepy's said in a statement on Tuesday that it would provide debtor-in-possession financing to help Dial-a-Mattress operate. The financing is subject to bankruptcy court approval.

Meadowbrook Farms, a cooperative of more than 200 family hog farm members who used a central processing plant in Illinois, has filed for chapter 7 bankruptcy. The cooperative owed its members money, having had a cash crunch shortfall because of a large default by a purchaser.

Barnes and Noble may be cutting hours of stores in order to keep doors open, but Borders, about to announce its 4th quarter of '08 numbers, has another plan, to be revealed next week. We're thinking "slash and burn" is the plan. Its stock is trading at 69 cents. It had terrible holiday numbers. And:

Borders also is expected to ask shareholders to approve a reverse stock split at its annual meeting on May 21 to use if necessary to push the share price above $1 and avoid delisting.

Here's a fascinating side effect of bankruptcy filings--we get to learn the semi-interesting names of creditors. From North Carolina:

Raleigh's Carolina Wine Co. left vino lovers across the country with empty glasses when it suddenly shut down this year.

But the company's bankruptcy filing reveals that it had widespread and, in some cases, famous clients.

So very, very, very, very many—and all fascinating stories, these are just a few of the going-out-of-business plans of mom-and-pop stores:

De Jong's Furniture of Brantford, Ontario.
Music City Gourmet of Nashville, TN.
Objets Trouvé of New Orleans, LA.

This is intriguing: a number of malls nationwide are cutting hours, instead of closing stores. Barnes and Noble is changing hours across the country. "General Growth, which is trying to avoid filing for bankruptcy protection, is changing the hours at many of its malls across the country, including Baltimore-area locations White Marsh Mall, Owings Mills Mall, Towson Town Center, Mondawmin Mall and The Mall in Columbia. The malls will close a half-hour earlier Monday through Thursday and close an hour earlier Friday and Saturday. On Sunday, the malls will open an hour later."

Famed luxury goods purveyor Tiffany might look immune to the recession but actually they are in a world of trouble. "Net income fell to $31.1 million, or 25 cents per share, down from $127.4 million," for one thing; these costs are associated with store closing and with layoffs. So what's Tiffany's solution? More layoffs! "Tiffany plans to offer early retirement packages to 800 of its employees in the U.S., and cut 10% of its staff worldwide." Great plan.

You may not have expected to see the recession come to Reno and Vegas, and yet! Herbst Gaming will lose control of its 15 casinos in Nevada, Iowa and Missouri in its new bankruptcy filing; the company blames its expensive expansion in the Nevada market in 2007. And extremely troubled Progressive Gaming, which at one time provided gaming systems for casinos, filed for liquidation this week.

What does all this timely demising and store shuttering and bankrupty look like in the real world of strip-malled avenues? Northeast Ohio's retail spaces now have a 10.3% vacancy rate, an all-time high—and very little of that is due to new construction:

"There is no retail demand from large tenants who want new locations, and developers have problems getting loans for new projects," [CBRE broker Thomas] Flynn said. "Both the demand and supply side (of retail development) are stalled."

Few prospective tenants are around to eat into the vacant space. Only a handful of value-oriented stores, such as Family Dollar and Dollar General, as well as auto parts retailers, are expanding, CB said in its report.

The 129 Boater's World stores in 27 U.S. states are being shuttered. Parent company Ritz Camera Centers Inc. (who knew?) filed for bankruptcy protection last month, and is attempting to raise cash by liquidating the boat stores' inventory. The company will also close 400 of its 800 camera stores.

The Greenbrier Resort in West Virginia, host to every U.S. President since Eisenhower, has endured speculation about a purchaser for some time, as it lost $35 million last year alone. The enormous facility—720 rooms! A 40,000-square-foot spa!—filed for bankruptcy last week and, pending approval, will be "bought" by Marriott, and by "bought" they mean that the current owner, railway giant CSX, will pay Marriott $50 million to operate it in exchange for not much more money than that. Unless that deal goes south. (Get it? South?)

On the heels of the Dial-A-Mattress drama, bed manufacturer Select Comfort is closing 55 stores in a reaction to lagging sales. Thirty of the store closings are planned for the first quarter, which means the stores will be shut in a matter of weeks. Select Comfort had 470 outlets prior to the announcement.

Please join me in welcoming the inimitable Choire Sicha to Timely Demise. He'll be handling the majority of posting while your usual host is out of town for a few days. Thanks, Choire!

The failure of a large chain like Circuit City means a competitive segment has an opening to be filled. After all, Best Buy can't be the only option for electronics retailing forever.

And so the market will slowly see companies begin to fill that void, starting in Connecticut, where PC. Richard & Son is expanding, opening a store in Norwalk. P.C. Richard is a 100-year old company that has grown slowly and locally in the New York metropolitan area. Now with 52 stores, it has the mass to continue its expansion into places where competition is light.

Expect to see more reports like this as the economy settles down and smaller companies decide to challenge the remaining national brands.

Dial-A-Mattress, the well-known mattress retailer who owns 1-800-MATTRESS and 1800mattress.com, has had an involuntary Chapter 7 bankruptcy motion filed against it by three of its creditors. The trio are reportedly angry that 1800mattress.com is not paying its bills. Just last week Dial-A-Mattress announced a plan to be sold to a business entity called Dial Mattress Acquisition LLC, which promised a "swift" injection of cash to keep the company running.

The bankruptcy filing does not affect 1800mattress.com franchisees throughout New England, who noted business continues as usual at their stores.

In New Jersey, pharmacy chain Drug Fair has closed six of 40 locations and reports suggest it is considering a bankruptcy filing. The chain is also selling numerous stores to Walgreen. The store closings began unexpectedly last weekend and continued with in-store announcements today.

Drug Fair, which has a private-equity owner, also operates a dozen Cost Cutter discount stores across the state. Drug Fairs have been open since the 1950s.

Update, March 18: Walgreen is now buying all of Drug Fair and closing 11 locations in total. The rest of the stores will be converted to the Walgreen's name.

Pacific Sun, battling the economic slowdown, is opening just three new stores this year and closing up to 150 underperforming outlets. The teen clothing retailer cites the closings as normal business procedure, but the lack of new-store openings means the chain will be shrinking as a result. PacSun recently discontinued its Demo chain to focus on the core business.

The couture design house MGB Squared filed for bankruptcy protection last week in order to keep its business operational. The company designs high-end clothing worn by celebrities and sold at retailers like Saks Fifth Avenue. Industry experts are uncertain that the filing will ensure continuity for the business.

Note: This entry erroneously suggested that MGB Squared designer Eric Gaskins personally filed for bankruptcy, which is inaccurate. Timely Demise regrets any misinterpretation.

Shabby Chic has begun liquidating its eight retail stores. The home goods line had quietly filed chapter 11 bankruptcy in January (so quietly, in fact, that Timely Demise didn't hear about it). A federal judge ordered the stores to liquidate as part of the bankruptcy proceedings. The liquidation does not include the Simply Shabby Chic line sold at Target. (This news will not be taken lightly at Timely Demise HQ, home to several Shabby Chic sheet sets.)

Creator Rachel Ashwell is retaining the rights to the Shabby Chic name and its designs, but it is unclear at this time whether the brand will continue, and in what form.

Here's an appropriate recession-era gimmick: a store where everything is free. Sure, it's an art installation, but Free Store is living up to its name, complete with transactions and sales receipts. Patrons are encouraged to drop off their own merchandise for the store to "sell," replenishing the supply. The store, in lower Manhattan, is open through the end of March.

This one just bubbled up: the Metropolitan Museum is closing 15 stores nationwide in a cost-cutting move. The museum only had 23 stores, so this is a substantial resizing. The news resurfaced in conjunction with reports of layoffs and financial losses in the museum's endowment. No operating plans are planned for the museum itself.

Eyeglass maker Luxottica announced 100 or more store closings in response to the global economic slowdown. The impact of the store closings specific to the U.S. market was not disclosed. Luxottica, which makes Ray-Ban, Oakley and other popular brands, expects to close two to three percent of its doors as well as reduce inventory.

Apparel manufacturer VF Corp. has completed the purchase of Mo Industries, the maker of the Splendid and Ella Moss clothing lines. VF already owns a wide variety of clothing lines, from John Varvatos to Wrangler. The former Mo Industries lines are expected to do $70 million in sales this year--after a $95 million 2008 performance.

Tween Brands, which bought the Limited Too chain in 2007, is closing up to 40 of its Justice stores to cut costs. Most of the closings will be in mall locations with store redundancies. Tween's company value is suffering; its stock may be delisted because its market capitalization is below required minimums.

The credit crisis has impaired Sportsman's Warehouse, a regional outdoor-products retailer in the west. The company is selling 15 of its 67 stores to UFA of Canada, but UFA has not closed the sale. As a result, Sportsman's Warehouse is experiencing a liquidity crisis, and must close 23 of its remaining stores. "We are now a 29-store chain," says CEO Stu Upgaard. The store closings affect a wide swath of states from Idaho to Mississippi.

Popular RV maker Fleetwood filed for Chapter 11 bankruptcy protection and is looking to sell itself. Fleetwood is closing factories and service centers but expects to continue operating during the proceedings. High fuel prices and the recession combined to greatly reduce sales, which led to the bankruptcy filing.

The Economist has a story this week exploring the booming business of discount stores in the recession. Not only is Dollar General expanding, but Dollar Tree had record sales in 2008 and 99¢ Only Stores rang up $1.2 billion in sales. The article notes that discount stores, which typically exist in distressed or rural areas, are rapidly advancing into city centers including Los Angeles and Chicago.

Handbag maker Lambertson Truex has filed for chapter 11 bankruptcy, citing reduced demand. A company executive said high-end spending had slowed, leading to a cash crunch. Lambertson Truex has closed two retail stores, while parent company Samsonite has kept its New York location. Lambertson Truex handbags can cost up to $18,000.

Ann Taylor is expanding its restructuring program and identified more store closings for 2009. The company--which is not restructuring under bankruptcy bylines--is closing an additional 37 stores in 2009, including 10 Ann Taylor and 37 Loft doors. The overall plan now includes 163 rather than 117 store closings.

Dillard's responded to poor sales and investor pressure by announcing plans to close five stores. The department store chain closed 21 doors in 2008. A handful of store closings are normal in a given year, but Dillard's announcement was timed to respond to the company's performance.

An interesting (if not unexpected) side effect of slow retail sales is its impact on job opportunities. As of December, the sector had 1.54 million unemployed retail workers and just under 300,000 job openings--more than twice the rate of a year ago. And the sector is attracting job-seekers new to retail, compounding the competition for jobs. With the average retail position paying $9.69 an hour, the growing applicant pool underscores the severity of the recession.

The economic downturn is hitting local stores especially hard. Saddest among those affected are the decades-old establishments suddenly facing bankruptcy or liquidation. Recent news affects regional chains with long histories:

• Cincinnati: luggage store Bankhardt's is closing. The store is 130 years old and has inhabited the same location since 1935. The business owner sold the building and is moving on. Interestingly, three splinter stores with the same name will continue to operate.
• The 16-store jewelry chain Robbins Brothers filed for bankruptcy after struggling during the recession. Robbins Bros' history dates to the 1920s, in Seattle, before moving to California and ultimately expanding to four states.
• In the Pacific Northwest, Joe's Sports and Outdoor is operating during a restructuring. The 30-store chain is owned by a private equity firm that filed as a strategic move. Joe's first opened in 1952 as a military surplus store.

New England retailer Better Bedding is closing more than half its stores as part of a bankruptcy restructuring. The company, which has 21 outlets, is shutting 11 of them and consolidating inventory. Better Bedding cited a 20 percent sales decline as part of the problem. The chain has been in business more than 30 years and is family-owned.

Door manufacturer Masonite announced a bankruptcy filing today. The company, which pioneered the use of special hardwood manufacturing techniques, has been in business since 1924. Masonite is widely used by construction and moving companies. Masonite Inc., which has been privately owned since 2005, reportedly has the financing in place for a successful restructuring.

Insiders have revealed that Virgin Megastore will be closing all its locations by this summer. Timely Demise covered three of the six closings last week; specific plans for the other three, in Denver, Hollywood and Orlando, have not been revealed. Billboard.biz reports parent company Virgin Entertainment Group North America will be liquidating in conjunction with the closings.

Even with six stores, Virgin Megastore was among the last and best-known national music chains. All coverage of this news notes what TD spotted last week: that Virgin Megastore's real estate ownership is going to profit more handsomely from increased rent--even in a down market--than it has as a music retailer.