No Turn On Red

Linens ‘n Things has announced they are filing for bankruptcy protection. They expect to be able to continue to operate as normal, pay employee salaries, and stock new merchandise. They just have an issue of several hundred million dollars in debt that they need to take care of.

I’d expect store closures, of some level, are imminent and Linens ‘n Things are going to enter the Back to School season with a significant reduction in their number of stores. Where are people going to go for Nautia comforter sets and Yankee Candles? I guess they will have to cross the street to Bed, Bath, and Beyond.

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Last month I mentioned that crafts retailer Rag Shop had filed for Chapter 11 Bankruptcy protection. Just over a month later, they have announced that they cannot find a buyer for the stores and will be closing. Their website is already changed over to reflect the liquidation sale.

The retailer cited increasing competition as a reason for closing. On average, it did not seem like Rag Shop stores were as large as competitors like Michaels or AC Moore. They probably also faced strong competition from Wal-Mart’s fabric department. The irony is that Wal-Mart has downsized the size of the cut-to-size fabric department over the past few years.

Assets were sold to Hilco Merchant Resources LLC. The company recently oversaw the closing of 76 d.e.m.o by PacSun stores and previously oversaw the closings of stores from Radioshack, Sam Goody, Suncoast, Winn Dixie, and Wegman’s.

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