Mervyns to closes 26 stores, including Boise

[ameskmart1]

NEW YORK - Mervyns LLC, the low-end department store chain that has been languishing for several years, could be the latest casualty of the fiercely competitive retail climate.

The privately held company, which operates about 175 stores in seven states but primarily in California, is facing bare shelves and a cash crunch as vendors are delaying shipments and key lenders that provide finance and credit to apparel makers have stopped approving orders.

"We are advising clients to hold off shipments primarily due to lack of communications from management," said Bob Carbonell, chief credit officer at Bernard Sands LLC, a credit monitoring company.

Carbonell, who said he's working with several dozen clients that sell to the chain, noted that Mervyns had been consistently providing financial updates until about a week ago.

A person close to the company who spoke on condition of anonymity because of the sensitivity of the issue said GMAC Commercial Finance stopped approving orders of merchandise last week.

Squeezed by high-end department stores at the top and large discounters like Wal-Mart Stores Inc. at the bottom, the 59-year-old Mervyns has been shuttering stores and leaving states such as Oregon and Washington since 2005, after a consortium of private equity players including Sun Capital Partners Inc. bought Mervyns from Target Corp. for $1.2 billion.

Mervyns, Sun Capital and GMAC did not immediately return calls for comment.

The chain's heavy concentration in California, which is among the states hardest hit by the housing crisis, has made a turnaround harder.

Consumers in those hard-hit regions are being forced to make hard choices, Carbonell said: "Do you go shopping at Mervyns or do you pay for gas and food?" He added, "Everybody is fighting for the same piece of the pie."

In April, Mervyns appointed John Goodman, who had been president and general manager of the Dockers brand - a key supplier to Mervyns - as president and chief executive. The company announced the next month that it had hired a real estate advisory firm to sell five to 10 underperforming stores that also had high real estate value. Mervyns said then that the move was expected to generate $25 million to $50 million in cash to fund operations and new growth.

The financial struggles of Hayward, Calif.-based Mervyns are another worry for the nation's malls, which have seen more and more vacancies amid store bankruptcies and closings. On July 9, Steve & Barry's LLC, once a growing force in low-priced fashion, filed for Chapter 11 bankruptcy protection. At the time, company officials said no decision had been made about possible store closures.

It joins home furnishings chain Linen n Things Inc., catalog retailer Lillian Vernon Corp. and specialty retailer Sharper Image Corp. in filing for bankruptcy protection this year. Sharper Image, which is now being liquidated, is selling its remaining assets to an investment group for $49 million.

http://www.azcentral.com/business/articles/2008/07/21/20080721biz-mervynswoes21-ON.html

[KmartDanny09]

**EDIT**

Double-post. Meant to post different story...

[Zayre88]

http://www.cnbc.com/id/25891328/for/cnbc/

Mervyn's may file for bankruptcy protection: report

updated 9:12 p.m. ET, Mon., July. 28, 2008

SAN FRANCISCO (Reuters) - Department store chain Mervyn's LLC will file for bankruptcy protection in the next few days barring a last-minute cash infusion, the Wall Street Journal reported on Monday on its website, citing people familiar with the situation.

Privately owned Mervyn's did not immediately return a call seeking comment.

[dmx10101]

Mervyns files for Chapter 11 bankruptcy protection, latest casualty in harsh retail climate

By ANNE D'INNOCENZIO | AP Business Writer
    5:57 PM CDT, July 29, 2008

NEW YORK (AP) _ Department store chain Mervyns LLC filed for bankruptcy protection on Tuesday, the latest in a series of merchants stumbling in the harsh retail environment and another blow to the nation's struggling malls.

The company, which had been languishing for several years, said that all of its 175 stores will remain open and business will continue as it reorganizes. Privately held Mervyns operates mainly in California, and has seen its sales drop further as the state is among the hardest hit by the real estate slump.

"Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry," Chief Executive John Goodman said in a statement.

The Hayward, Calif.-based chain has been shuttering stores and leaving states such as Oregon and Washington since 2005, after a consortium of private equity players including Sun Capital Partners Inc. bought Mervyns from Target Corp. for $1.2 billion.

Mervyns, along with some affiliates, filed for Chapter 11 protection from its creditors in U.S. bankruptcy court for the District of Delaware. According to court documents, Mervyns listed liabilities and assets of $500 million to a $1 billion each, with Levi Strauss & Co. as its largest unsecured creditor.

Company spokesman James Golden said it was premature to discuss layoffs or store closings.

Tuesday's announcement follows a slew of bankruptcy filings from retailers in recent months and marks the latest challenge to the nation's malls, which are seeing increasing vacancy rates. Earlier this month, Steve & Barry's LLC, once a growing force in low-priced fashion, filed for Chapter 11. The list also includes home furnishings chain Linen 'n Things Inc., catalog retailer Lillian Vernon Corp. and specialty retailer Sharper Image Corp.

On Tuesday, the Bennigan's and Steak & Ale restaurants owned by Metromedia Restaurant Group, which operates in many mall locations, filed for Chapter 7 bankruptcy protection. Meanwhile, Reading, Pa.-based regional department store chain Boscov's Inc., which operates about 50 stores, has seen vendors hold off shipping to the merchant as it heads into the important back-to-school period.

Mervyns' filing didn't come as a surprise to the industry, as a growing number of vendors were delaying shipments to the company's stores and key lenders that provide finance and credit to apparel makers stopped approving orders in recent weeks.

The 59-year-old chain has been squeezed between high-end department stores and discounters like Wal-Mart Stores Inc. In April, it appointed Goodman, who had been president and general manager of the Dockers brand — a key supplier to Mervyns — as president and chief executive.

Mervyns announced the next month that it had hired a real estate advisory firm to sell five to 10 underperforming stores that also had high real estate value. Mervyns said then that the move was expected to generate $25 million to $50 million in cash to fund operations and new growth.

But the chain's heavy concentration in California has made a turnaround harder, Sun Capital acknowledged in a statement on Tuesday.

The private equity firm, which has interests in turnaround candidates like retailer the Limited Brands Inc. and apparel maker Kellwood Co., as well as struggling automaker Chrysler and GMAC Financial Services, said it was clear when it acquired Mervyns that it was a "high-risk turnaround."

But the Boca Raton, Fla.-based firm led by co-CEOs Rodger Krouse and Marc Leder, which could see its investment wiped out in bankruptcy, blamed the sustained economic downturn in California for making a turnaround "impossible." The firm declined to specify how much of a stake it held in Mervyns.

In conjunction with its filing, Mervyns said it has received a commitment for $465 million in financing from a group led by Wachovia Capital Finance Corp. Upon bankruptcy approval, that financing, combined with operating cash flow, will be used to fund the company's operations, Mervyns said.

Jeff Knopman, principal at Profit Solutions Group Inc. which works with vendors in recouping illegal or unauthorized chargebacks, said that the latest filing creates more woes for suppliers, who have fewer stores to sell to. The consolidation of the retail industry means more power to the handful of department store retailers, which can increase financial demands.

"Every filing creates more leverage for the retailer," said Knopman. "It's not good for anyone — not good for consumers, the employees and the vendors."

[ameskmart1]

BOISE -- The Mervyns department store chain announced Wednesday that it plans to close 26 of its locations in Idaho, Arizona, California, Nevada and Texas by this fall.

That's about 15 percent of the 176 stores the company operates nationwide.

Among the stores slated to close is the Mervyns at the Boise Towne Square Mall.

The Hayward, Calif.-based chain filed for Chapter 11 bankrupty protection last month. Company officials say this is part of a cost-cutting move.

Mervyns Chief Executive Officer John Goodman says the company will focus attention on remaining stores that meet performance objectives in Arizona, California, Nevada, New Mexico, Texas and Utah.

"While the decision to close this group of under-performing stores was not easy, we believe this is a necessary step in our process to emerge from bankruptcy as a stronger company, better positioned to compete in the retail industry," said Goodman.  "We thank our associates and our many loyal customers, especially those in these affected locations, who have supported us for many years. We are committed to treating those associates affected by today's announcement fairly, and will seek to provide them with appropriate assistance to make this transition as smooth as possible."

About 90 to 120 jobs at each store will be eliminated by the closures, which are scheduled for late October to early November.

[ameskmart1]

Mervyns will liquidate remaining stores and cease operations
http://cbs5.com/business/mervyns.chapter.7.2.842505.html