June 2009 Archives

Premium children's clothing retailer Pumpkin Patch is reviewing its U.S. operations and will be closing around 20 of its 35 locations this summer. The company, which is based in New Zealand, hopes to close in on a break-even level with the action. Pumpkin Patch's U.S. stores have struggled since 2007 and underperformed in the recent economic climate.

In Richland, Wash., 13-year-old Liquidation World is going out of business. Its parent company, in Canada, is closing all its United States locations (which, to the best of Timely Demise's knowledge, totals three stores in Washington state).

Two celebrity-focused jewelers fell victim to the recession this month.

First, Michael Beaudry, who is known for manufacturing and supplying jewelry to Hollywood stars, filed for bankruptcy June 4. Sister company Centerstone Diamonds filed for Chapter 11 on the same day. No information is available about the company's future plans.

Yesterday, Harry Dunay also filed for Chapter 11 bankruptcy, citing economic conditions. The business, which dates to 1965, sells its jewelry at high-end stores like Neiman Marcus as well as direct to celebrities. Harry Dunay plans on reorganizing the business and continuing operations.

Luxury and specialty stores nationwide are reducing the amount of items they order to balance their inventories--and expectations--post-financial crisis.

Steven Sadlove, CEO of Saks, refers to "enormous excess" as driving sales in 2008, and tells shoppers to expect "less of the sizes, less of the availability in almost all of the categories." Saks Fifth Avenue and Neiman Marcus cut orders 20 and 25 percent this quarter, respectively.

This author's wife has noticed a similar trend on a local level--the shoe stores in our neighborhood are stocking much less merchandise than last year, most likely in anticipation of lower volume.

Furniture retailer the Door Store filed for bankruptcy protection in late May. The Door Store, which was founded in Ohio in 1953, has had a drastic sales shift since the financial crisis began. High rents on large showrooms are being cited as the main cash flow concern. The company expects to fulfill all outstanding orders and continue operations.

Anchor Blue, a southwestern chain selling denim and other clothing, is closing and liquidating 46 stores. The closings are related to a bankruptcy filing from May (which somehow slipped past Eyes McGurk at Timely Demise). Anchor Blue had 177 stores before the closings; another 75 Most outlet stores were sold to Levi Strauss at the time of the Chapter 11 filing.

Apparel and footwear retailer Finish Line, responding to poor company-wide sales, is selling the Man Alive chain to the owner of Jimmy Jazz. Man Alive is a 75-store street wear retailer, and is a small piece of Finish Line's business, which has 685 Finish Line stores alone. Jimmy Jazz has roughly 65 outlets and the Man Alive acquisition will "accelerate growth initiatives in the urban market sector faster than we could attain through organic growth alone," stated owner Jimmy Khezrie in a statement.

Tool supplier Western Tool filed for Chapter 11 bankruptcy last week to deal with a cash crunch. The company, which had as many as 61 stores across 13 states, is down to just over half that number. Western Tool plans on using the bankruptcy filing to "stabilize operations" and continue in business.

Apparel retailer Abercrombie & Fitch is shutting down the Ruehl chain and closing all 29 doors. The company first publicly cast a skeptical eye on the brand several weeks ago. Ruehl's sales were down 33% in the most recent reported figures.

Following a week of speculation, clothing company Eddie Bauer filed for Chapter 11 bankruptcy today. The filing coincides with a plan to sell the business to a private capital group.

Eddie Bauer, which had 371 stores across the United States, is struggling with the usual combination of poor sales and mounting debt. The company traces its debt issues all the way back to previous parent company Spiegel's bankruptcy filing in 2003.

General Motors agreed today to sell its Saab brand to Swedish sports car maker Koenigsegg. The move divests yet another brand from once-mighty GM, which sold Saturn to Penske and Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Company in recent weeks. In addition to GM's dealer closings and plans to shutter the Pontiac brand, the revamped General Motors will be a vastly different firm when it emerges from bankruptcy.

Equally notable, though, is how the divested car lines might fare. Three significant car companies are now held by smaller firms with niche ambitions. This inadvertently trends the auto industry toward pre-1980s merger days, when more small firms had ambitions and opportunities to grow in a splintered market. Volvo, Jaguar, Land Rover, AMC/Jeep, Mazda, Nissan, Saab--all were once independent companies with unique identities. While Chrysler may turn into Fiat USA, many other car lines have a chance to creat unique, compelling products. Expect a more competitive and innovative car market over the next decade as these companies start to differentiate themselves.

Extended-stay hotel chain Extended Stay Hotels filed for bankruptcy protection to mitigate a huge debt load. The filing, which pits the chain's new owner against its creditors, may have legal ramifications affecting many lenders and the U.S. government. No word is available on how the bankruptcy may affect Extended Stay Hotels' 680 locations.

Theme park operator Six Flags filed for bankruptcy this weekend after a lengthy struggle with its debt load. The company is defaulting on $1.8 billion in oustanding obligations. Six Flags is the largest theme park operator in the U.S., with 20 parks scattered around the country as well as in Canada and Mexico.

Six Flags vows that the bankruptcy filing will not affect park operations, which are reaching peak season as schools let out for summer.

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 a pair of stores in the midwest with particularly long histories:

• In Wisconsin, Conkey's Bookstore is closing for good. The store is 113 years old and on its fifth owner. While the store is beloved in town, the loss of a college textbook contract to Barnes & Noble was a fatal blow to its profits.
  
• Out in Minnesota, Schneiderman's flagship is closing after 40 years in business. The Duluth location has outperformed the one in Meadowland, which is liquidating its inventory.

Appco, the Appalachian Oil Company, is liquidating its assets as part of a bankruptcy proceeding. Appco operates 47 convenience stores in Tennessee, Virginia and Kentucky in addition to its oil business. The stores are being offered for sale, with no set plan for new ownership.

Genmar Holdings, which manufactures 13 different boat brands, filed for bankruptcy thanks to the credit crisis. As recently as last month the company had no expectations of a bankruptcy filing. Genmar's boat brands include popular lines such as Triumph, Windsor and Ranger.

Hendricks Furniture filed for Chapter 11 bankruptcy today, citing economic conditions. The company's rapid expansion into Drexel and Thomasville stores created cash flow issues exacerbated by the financial crisis. The company's restructuring plan is already underway.

Apparel retailer Talbots is selling the J. Jill line to a capital investment firm. Seventy-five of J. Jill's 279 stores will close as a result of the sale. Talbots is positioning the move as a brand focus maneuver for the parent company, but the brand was sold at a "huge loss," according to the Wall Street Journal, and does not help Talbots' difficult financial situation.

The Filene's Basement discount chain has been purchased by Men's Wearhouse, the men's clothier. Men's Wearhouse outbid two other companies, including fellow discount retailer Syms. The buyer is expected to retain roughly 20 of Filene's Basement's 25 existing stores, shutting a few suburban locations.

Filene's Basement has had an interesting run in the past year, from closing a third of its stores to selling itself to a liquidation firm shortly before filing for bankruptcy in May.

Procter & Gamble has decided to cease United States distribution of the storied Max Factor makeup line. Max Factor, which began in 1909, is a billion-dollar line but gets a majority of revenue from international sales. The company was founded in 1909 by a Russian immigrant who coined the word "makeup" and is credited with helping popularize its daily use.

Apparel retailer Oilily filed for bankruptcy, the latest victim of the economic crisis. The 33-store retailer sells women's and children's clothing in mall locations. Oilily was recently acquired; it previously declared bankruptcy in Europe and closed all European locations.The company has also closed 8 U.S. locations in recent months.

General Motors, once the largest automaker in the world, is filing for bankruptcy Monday morning, the latest step in a long process to try and save some of the company. GM, which has taken billions of dollars in government assistance, is expected to need another $30 billion to complete its reorganization.

The bankruptcy process, which should be complete over the summer, will result in the General's closing or selling many of the brands in its stable. Pontiac is following Oldsmobile into automotive history; Hummer is rumored to be near a sale, and in Europe, Opel was recently sold, with Canada's Magna taking the largest stake.

GM's filing comes barely a month after Chrysler announced its own bankruptcy. Chrysler, like GM, received government bailout funds ahead of its bankruptcy filing.

Op-ed: This author, while generally supportive of domestic manufacturing, has publicly endorsed GM and Chrysler's bankruptcies, and hopes Detroit's once-big three will be able to continue a proud American tradition.