Monday, November 17, 2008
Some stores closing before Christmas
By Naomi Snyder • THE TENNESSEAN • November 17, 2008 It's going to be a liquidation Christmas this year. Several national retailers, including Circuit City and Linens 'N Things, have filed for bankruptcy protection and will close stores. Some locally owned shops are closing, too, and selling off or liquidating merchandise. Normally, retailers try to wait until after the holidays to file for bankruptcy. Not this year. They simply are running out of money too fast. "Many retailers were trying to hold on until January,'' said Britt Beemer, founder of America's Research Group, a retail research firm. "When September and October came, it weakened them so much, there was no way they could withstand those kind of sales declines." A stock market free fall, rising unemployment and sinking consumer confidence helped push national consumer spending down 3.1 percent in the third quarter, the worst performance in 28 years, according to the U.S. Department of Commerce. "Sales have completely fallen off a cliff,'' said Taylor Condra, the director of operations for the 61-year-old family-owned furniture business Cresent Enterprises here. Although the Gallatin-based company is closing its two retail locations, one in Nashville and one in Cool Springs, it has not filed for bankruptcy protection. The family intends to continue manufacturing furniture overseas and importing and selling it in the U.S. The retail stores hadn't been profitable for two years and sales significantly dropped off during the last two months, Condra said. His company will start its liquidation sale Friday. Waller Furniture in Madison also is closing up shop and liquidating the store. Also, Daniel Gordon, owner of Island Sports inside the Shoppes at Home Depot on Bell Road, said he decided to close his retail store when its lease expired because sales were slow and it was too hard to compete against larger sporting goods chains. Climate 'very stressful' He called the current economic climate "very stressful" for small-business owners. "You put all your money in it, all your savings, and then watch it disappear," Gordon said. He held a clearance sale over the weekend, but will continue to sell standard school clothing for Metro students via a Web site only. "We're going to reorganize," he said. "Our main focus will be online." Bankruptcy only option Add to the retail hit list Linens 'N Things, which filed for bankruptcy protection last May and is in the midst of closing all its stores. There are four in Middle Tennessee, in Brentwood, Goodlettsville, Murfreesboro and Clarksville. The New Jersey-based housewares company initially tried to close some stores and find a buyer, Beemer said. But with few buyers willing to step up in an economic downturn, Linens 'N Things had no luck and no other choice. Circuit City filed for bankruptcy protection a week ago after announcing plans to close one-fifth of its stores, or 155 locations. Only the stores that are closing will have liquidation sales. That includes outlets in Spring Hill and Antioch in Middle Tennessee. The company said it filed for bankruptcy protection because vendors had lost confidence that they'd be paid if they shipped products to Circuit City. "Operating under the protection of Chapter 11 (part of the bankruptcy law) will provide the company's vendors with assurances that they'll be paid for merchandise the company receives post-filing so the company can be sufficiently stocked for the holiday … season," Circuit City said in a statement. Harvard Law School professor Lynn LoPucki keeps a database of major bankruptcies. Five retailers with assets of more than $250 million have filed for bankruptcy so far this year, up from two last year and none the year before, according to LoPucki's database. However, 2008 hasn't topped the year 2000, when 12 major retailers filed for bankruptcy, many of them grocery store chains such as Big V Supermarkets and Eagle Food Centers. LoPucki's figures show that January tends to have more retail bankruptcy filings than any other month of the year. "As long as there's a Christmas ahead, there's still hope,'' LoPucki said. More closures to comeThis year, though, there has been a surge in store closings before the holidays. The International Council of Shopping Centers estimated last month that 2008 will see 148,000 store closures, the largest spike since 2001. It projects an additional 73,000 store closures in the first half of 2009.Beemer predicts even more bankruptcies in the spring, if Christmas fails to save several struggling retail chains. Consumers may benefit in the short run from all the liquidations sales, but they'll end up with fewer shopping options later, he said. "I believe we'll see more bankruptcies next spring than we've seen the last five years combined,'' Beemer said. "There are a lot of retailers who are going to have an extraordinarily bad Christmas."
Posted by Blogger at 1:41 PM