For Joe's Sports, it's the end of the line

[ameskmart1]

Fifty-seven years after World War II veteran Edward Orkney started selling Army surplus sleeping bags out of a station wagon in Portland, Joe's Sports is calling it quits and will soon close all 31 of its stores.

Joe's fate was sealed Thursday at a federal bankruptcy-court hearing in Delaware, where Boston liquidator Gordon Brothers Group offered to buy $128.5 million worth of merchandise for $61 million. It was the highest of three offers liquidators made in the five weeks since Joe's filed for Chapter 11 bankruptcy protection.

No offers were made to keep any stores open.

Going-out-of-business sales begin today and continue until the merchandise is gone.

Joe's said it had suffered, like other retailers, from "very weak sales" in the recession. It was also hurt by poor holiday sales caused by "unseasonably dry weather throughout the Pacific Northwest."

In turn, Joe's pumped up promotional spending to try to boost sales, and its profit margins shrank, according to its bankruptcy filing.

Joe's has 15 locations in Washington state, a dozen of them in the Puget Sound region, as well as 14 in Oregon and two in Idaho. It is based in Wilsonville, Ore., and has about 1,600 employees.

The closure of all 12 Puget Sound stores will throw more than 430,000 square feet of retail space onto a beleaguered real-estate market.

"They're going to be big, dark, empty boxes," said Jeff Green, a retail consultant in the San Francisco Bay Area. "Unfortunately, there aren't any new big-box retailers on the horizon."

Joe's stores cover an average of 40,000 square feet in the Puget Sound region, said Susie Detmer, a retail specialist at brokerage Cushman & Wakefield. That puts them in roughly the same real-estate category as Linens 'n Things, Steve & Barry's and Circuit City — national retailers that also have gone through bankruptcy proceedings recently and have closed stores.

Counting Joe's, more than 1 million square feet of "junior anchor" retail space throughout the region will have been emptied in recent months, Detmer said.

She predicts some of the vacant storefronts will be broken up into smaller spaces or rented out to medical offices, call centers and thrift stores.

Other possible tenants for Joe's locations are Dick's Sporting Goods and The Sports Authority, she said. Pittsburgh-based Dick's has 384 stores, most of them in the eastern U.S., though none in Washington. Sports Authority, of Englewood, Colo., has more than 450 stores, including eight in the Puget Sound region.

James Chartier, an analyst who follows the sporting-goods industry for Moness, Crespi, Hardt in New York, said Dick's prefers one-story, 50,000-square-foot locations in new developments, suggesting that Joe's stores might not fit its criteria. Sports Authority, which has stores between 35,000 and 50,000 square feet, is a more likely replacement, he said.

Joe's, formerly named G.I. Joe's, got its start in 1952 after Orkney, an Army Air Corps pilot, returned from World War II. Orkney died in 1976, and son David took over.

Two years ago, Joe's was bought by Gryphon Investments, a San Francisco private-equity firm that subsequently dropped the "G.I." from its name. Some saw the name change as part of an attempt to give the hunting-and-fishing-gear company a more upscale image.

"Longtime customers were upset by the change, but in all fairness to the investors, they probably concluded that they needed to find a niche that would make them stand out," said Renee Fellman, a business-turnaround expert in Portland. "We'll never know what would have happened if the retail market hadn't collapsed in the past six months."

http://seattletimes.nwsource.com/html/businesstechnology/2009016502_joes10.html