David Wertheimer: May 2009 Archives

Southern restaurant chain Whataburger is closing 14 of its Florida locations due to the spending slump. Whataburger, which has more than 700 outlets across the southern states, is closing its company-owned Florida stores while franchised locations remain open. The 14 affected stores all closed for good May 31.

Despite its association with Ford--the only Detroit automaker not in, or flirting with, bankruptcy--parts supplier Visteon joined the bankruptcy crowd today. Visteon, which supplies Ford with an extensive array of supplies, was battered by Ford's 40 percent sales decline. Several Visteon subsidiaries filed for bankruptcy as well.

Nearly 50 auto parts and supply companies have filed for bankruptcy in 2008 and 2009.

The famed Christian Lacroix fashion house filed for bankruptcy in Paris. Despite plans to continue operations, the company was unprofitable for years. Sales were down roughly 35 percent at Lacroix's two US stores.

The article linked above notes that Lacroix was the last formally established couturier, and that its loss is "immeasurable."

Brown Shoe, parent company of Famous Footwear and Dr. Scholl's, is closing more stores than expected due to the weak economy. Total closings may reach 70 locations by year's end.

In addition to Famous Footwear, Brown Shoe's brand portfolio includes Via Spiga, Naturalizer and Buster Brown shoes. The company did not disclose which lines would be affected by the increased closings.

Famed stationer Mrs. John L. Strong is ceasing operations and closing its store and catalog. For 80 years Mrs. John L. Strong was a high-end purveyor of paper and cards; debutantes and celebrities from Oprah to the Dutchess of York were known to use its stationery, which could cost more than $5 per card. Economic conditions and changing social norms forced the closure of the business, which was still family-owned.

S&K Menswear, which filed for bankruptcy in February, has decided to close all its stores through liquidation. The chain has begun final clearance sales at all 105 stores.

Supermarket chain Albertsons is announcing a shift in prices to retain customers who have been shopping at discount stores. The program, called the Big Relief Price Cut, lowers prices throughout the store at 222 Albertsons locations in California. The move is designed not only to counter the discounters, but to keep up with competitors like Vons and Ralphs, who have already moved to push prices down.

(As an aside, what's with the California grocery scene that no one uses apostrophes? Albertsons, Vons, Ralphs--can't anyone use the possessive anymore?)

Credit card companies, facing mountains of bad debt from unpaid consumer bills, are working on ways to eke more money out of cardholders. Among the plans are more annual fees, faster interest accruals and lower bonus levels on cash-back and points programs. The moves are intended to maintain revenue streams to offset the expected bad debt.

These plans by credit card issuers come as Congress actively curtails numerous credit-card company business practices in a consumer protection move. Issuers will find it much harder to charge fees and raise interest rates on borrowers, moves that used to create a large segment of industry revenue. The reform bill has cleared the Senate and may be signed into law in the coming days.

Apparel retailer Abercrombie & Fitch responded to economic pressure by announcing a plan to lower prices on many of its clothes. The chain, which caters to upmarket teens, had previously defied market trends by prominently staying the course with its high-end merchandise. Just weeks ago Abercrombie was still "protecting its brand" by keeping prices high.

Bathroom fixture manufacturer Waterworks has filed for Chapter 11 bankruptcy and closed 20 stores. The 31-year-old company was forced by economic conditions to perform a rapid downsizing alongside the bankruptcy filing. Waterworks plans on retaining 18 stores.

In the wake of its bankruptcy filing, Chrysler has sent shutdown notices to 789 dealers around the United States. The outlets, which are typically well-protected from forced closures, can be closed since Chrysler has declared bankruptcy. The 789 stores are roughly 25 percent of Chrysler's total; the resulting network of around 2300 pales in comparison to the 6000-plus locations open at the company's peak.

General Motors, which is still debating a bankruptcy filing, has announced plans to close 2600 dealerships but details have not been disclosed.

From Barbara Farfan at the About.com retail industry blog (a good read and a good tweet, by the way) comes this heartening list of chains opening stores in 2009. Timely Demise suspects the openings are global, not national--there's virtually no way McDonald's is opening a thousand new stores in the U.S. this year--but it's nice to be reminded that for many people, the commerce engine chugs along. (Barbara also maintains a list of store closings that includes many of the items covered here in recent months.)

Mattress manufacturer Spring Air shut down its manufacturing nationwide last week and is filing for bankruptcy protection. The company has been suffering under a severe debt load and reportedly was unable to secure new financing through a buyout. Up to nine plants have been closed and the company's futue is unclear.

Macro-level trend alert: an entire mall announced its closing this week. The Summit, a mall in Buffalo owned by Oberlin Plaza One, is closing in a month after the parent company filed for bankruptcy. The Summit has roughly 25 tenants, excluding its flagship department stores Bon-Ton and Sears, which own their own spaces, as does a Sav A Lot outlet on the site.

Norwood Promotional Products filed for Chapter 11 bankruptcy and is trying to sell its assets. This one's not directly b2c, but if you have a pen, calendar, golf tee or bag from a conference with a logo on it, there's a decent chance it came from Norwood, the second-largest supplier in the U.S. The company cited economic conditions, high debt and a decline in order volume, coupled with $17 million in recent flood damage, as combining to throw the company into bankruptcy. Norwood has arranged a buyer for the tail end of its bankruptcy process.

Another interesting twist: news has leaked that luxury retailer Barneys is trying to close two stores. The locations, including one in Las Vegas, are significantly underperforming as consumers cut back on luxury goods. Barneys has denied the rumor.

Despite its national tastemaker reputation, Barneys only has seven stores, so two potential closings would be significant. The store's owners recently claimed sufficient cash on hand to weather the 2009 slump.

Hip gym chain Crunch Fitness filed for bankruptcy protection and announced the closing of one of its 25 locations. The company cited slow membership activity and high leases as causing a credit, er, crunch.

Crunch hopes to sell its assets/be acquired by its major lender in a new joint venture; a deal is expected to close in July.

Here's a twist: the ownership group of the Phoenix Coyotes of the National Hockey League filed for bankruptcy as the first step in a potential sale of the organization. The Coyotes claim to have lost money every year since arriving in Phoenix in 2001.

The team hopes to be purchased by the CEO of Research in Motion, makers of the BlackBerry, who will probably try to relocate the Coyotes to Canada. The NHL, meanwhile, was taken by surprise, and is "investigating the propriety of the bankruptcy filing" and the terms of the sale.

Ohio retailer International Diamond and Gold is reportedly closing all its stores. The jeweler, which has eight locations around Central Ohio and Seattle, was taken over by creditors last week.

Discount retailer Filene's Basement filed for bankruptcy and agreed to sell 17 of its 25 remaining stores as part of its reorganization. The filing is expected to allow the stores to continue operating while the new owner takes over the chain.

Filene's Basement sold itself to a liquidation firm last month as preparation for the move, three months after closing a third of its stores to eliminate underperforming locations.

In a significant shift to a small but influential retailer, upscale women's store Henri Bendel will stop selling clothes this summer. Stores will focus on accessories and beauty products, which are the more profitable areas of the business.

Henri Bendel, which is owned by Limited Brands, is also giving up one floor of its handsome store on Fifth Avenue in Manhattan.