No Turn On Red

It is now reported the Circuit City has failed to find a buyer willing to take over their store operations and instead has reached a deal with a liquidator. The electronics retailer filed for Chapter 11 bankruptcy protection in November and closed 155 stores in Q4 of 2008. They will now close the remaining 567 stores in the United States. Adding to the growing US job loss numbers, up to 35,000 people will be affected by these store closings.

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Boscov’s announced yesterday that a judge has approved the sale of the company’s assets to a group led by former chairman Albert Boscov and Edwin Lankin. In August, the retailer filed for Chapter 11 Bankruptcy Protection and closed 10 of their stores. There has been some debate over who would receive the assets, as a judge reviewed competing bids from the family led group and Versa Capital Management.

I am personally happy to see the retailer remain in family control. Although I lost the Boscov’s in my area with the August closings, it was always a good mid-size department store alternative to the national chains. I hope the new owners can bring better days back to the retailer and see them through this economic mess.

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Members of the family that founded and, for many years, ran the Boscov department store chain have revealed that they have bid to buy back the stores current under bankruptcy protection:

Albert R. Boscov and his brother-in-law Edwin A. Lakin are among the group who put in an offer for Boscov’s Inc., in a bankruptcy auction that culminates next week with the selection of a winning bidder, Boscov said in a report published today.

The pair, who helped run the company for decades, received multimillion-dollar buyout packages when they retired in January 2006 and handed the controls to Lakin’s son, chief executive officer Ken Lakin.

Boscov’s, you may remember, filed for bankruptcy protection in August and immediately closed 10 of their 49 stores. The remaining 39 stores are still operating under bankruptcy protection while bids are accepted that will determine the future of the company.

The deadline for bids was October 15 and more information may be revealed next week as to who the new owner will be. The other top bidder is Versa Capital Management.

I’d like to see someone buy Boscov’s who will continue to operate it. It’s a respectable mid-size department store chain. While my local Boscov’s has already closed, I hope the other 39 can remain open as long as financially feasible.

With the economy as it stands today, I can’t really imagine someone buying the chain with the intention to shut it down and sell off the real estate. There’s not a huge market for mall anchor real estate right now. Other department store chains, like Kohl’s and JC Penney, have already announced reductions in their short-term growth plans. Who else would be moving in to these locations?

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It’s official:

Boscov’s Inc., the 9,500-employee department-store chain founded in 1911 in Reading, Pennsylvania, filed for Chapter 11 bankruptcy protection in Wilmington, Delaware, today, citing decreased consumer spending.

Boscov’s, which said in court papers that it’s the biggest family-owned full-service department store chain in the U.S., will immediately close 10 of its 49 stores. The company said it will borrow as much as $250 million from a group of lenders led by Bank of America Corp. to help it restructure.

The Associated Press has the full list of stores that are closing:

MARYLAND
Marley Station Mall, Glen Burnie
Owings Mills Mall, Owings Mills
White Marsh Mall, Baltimore

NEW JERSEY
Monmouth Mall, Eatontown

PENNSYLVANIA
Harrisburg East Mall, Harrisburg
Monroeville Mall, Monroeville
Montgomery Mall, North Wales
Oxford Valley Mall, Langhorne
South Hills Village Mall, Bethel Park

VIRGINIA
Piedmont Mall, Danville

More coverage from the Associated Press, Wall Street Journal, and Reuters.

This is a blow to the retailer that touts itself as American’s largest family owned department store. In an age of consolidation and rapid, national, retail expansion, Boscov’s was one of the last regional department store chains that we had here in the Mid-Atlantic.

I wonder how many of these locations are being scouted by JC Penney and Kohl’s.

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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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