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Retail Bankruptcies and Store Closings Sign of
Grim Economy
Dark clouds hang over some long-standing, well-respected retail
chains. Earlier this year, more than two dozen leading names
in retail announced they were closing stores or filing for
Chapter 11 bankruptcy protection. Some shuttered their operations
for good.
Problems range from poorly supported brand images and unmet
shopper expectations to ineffective pricing structures. The
declining economy exacerbated many of these problems.
“There are various reasons why some retailers have failed
recently,” says Richard Hastings, Economic Advisor, The
Federation of Credit and Financial Professionals. “Most
point to a significant mismatch between retailer brand and
merchandising, as well as meeting shopper expectations. As
the chasm increased, financial stresses were impossible to
sustain.”
According to Hastings, the economy has affected consumer
confidence and may have sped up some retailer’s inevitable
downturn. “The ‘consumer economy’ is in recession
and we expect this to be a prolonged issue. All it will take
is a slightly slower consumer economy to encourage many CFO’s
to rethink budgets and investments and in some instances,
close stores.”
Here is a list of some of the more prominent retailers that
are closing stores or shuttering operations for good.
• CompUSA: All 103 stores will be sold or shut
down. After being acquired by an investment firm, the company's
business and assets are being sold. The retail stores that
don't sell will be shut down.
• Levitz Furniture: The furniture retailer has
liquidated its assets and closed all of its 76 stores.
• Bombay Company: The company unveiled plans
to close all 384 U.S.-based Bombay Company stores. The company’s
online storefront has discontinued operations.
• Sharper Image: The company recently filed for
bankruptcy protection and announced that 90 of its 184 stores
are closing. The retailer will still operate 94 stores to
pay off debts, but 90 of these stores have performed poorly
and also may close.
• Charming Shoppes: The operator of Fashion Bug,
Lane Bryant & Catherine's plans to close 150 underperforming
stores, lay off 150 employees and reduce the amount of stores
it will open in 2009.
• PacSun 'Demo' Stores: Pacific Sunwear will close
its 154 Demo stores after a review of strategic alternatives
for the urban-apparel brand. Seventy-four underperforming
Demo stores closed last May.
• Talbot's Kids, Mens: The company reported that
78 stores will close after disappointing sales were reported
for the children's and men's apparel stores.
• Ethan Allen Interiors: The company announced
plans to close 12 of 300+ stores in an effort to cut costs.
• Movie Gallery-Stores: The video rental company
plans to close 400 of 3,500 Movie Gallery and Hollywood Video
stores in addition to the 520 locations the video rental chain
closed last fall.
Other retailers facing closures include Rite Aid, Macy’s,
Sofa Express, Kirkland’s, Sigrid Olsen (part of Liz Claiborne),
Jasmine Sola and Rent-A-Center.
-Christina Zarrello
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