- The Washington Times - Monday, January 28, 2002

It's that time of year again. Struggling retailers are filing for bankruptcy or closing up shop coming off among other things a disappointing holiday season.
Discount retailer Kmart Corp. filed for Chapter 11 bankruptcy protection on Jan. 22 and plans to close down its unprofitable stores in an effort to get back on its feet. Chains like Frugal Fannie's and Service Merchandise are closing down their stores after sluggish sales.
"Tis the season to file [for bankruptcy]," says Martin Zohn, a partner at the law firm Proskauer Rose.
The holiday season the busiest shopping days of the year usually provides a lifeline to retailers, who expect the bulk of their sales to be made during the November and December months.
When sales aren't sufficient many retailers decide to file for bankruptcy in order to refinance and reorganize the company. Oftentimes a Chapter 11 filing is the result of overexpansion and it allows the company to get back to its core business, Mr. Zohn says.
That's what Kmart executives are hoping for. This quarter the company will take a close look at its more than 2,100 stores, including the 15 locations in the Washington area, and decide which ones must shut down this year.
Kmart's bankruptcy case is the largest filing in retail history listing $17 billion in assets and $11.3 billion in liabilities.
Earlier this month Service Merchandise, the specialty retailer that has operated under Chapter 11 bankruptcy protection since 1999, decided to halt operations and started "going-out-of-business" sales Jan. 19. The 215-store chain has stores in Baltimore, Columbia, Md., and Chantilly and are expected to be cleared out soon.
"The closing of Service Merchandise represents another example of the changing retail marketplace and pressures our current economy is facing," says David Bernstein, principal of SB Capital Group, a retail consulting firm involved in Service Merchandise's liquidation.
Frugal Fannie's, which sells name-brand merchandise for discount prices, is closing all of its stores outside its Massachusetts market including the four stores in the Washington area. The company has not filed for bankruptcy and will continue to operate its four Massachusetts stores.
Earlier this month, the Westwood, Mass.-based chain started going-out-of-business sales in Rockville, Herndon, Falls Church and Springfield, and one store in Pennsylvania.
Store officials say the store closings were a result of the recession, September 11 terrorist attacks and an unusually warm fall and winter season, which all affected sales dramatically.
The four Washington stores are expected to close by the end of February.

What's new?
IKEA won final approval from the Prince George's County council to build a new store, offices and a restaurant on a 45-acre site in College Park. IKEA will have to dish out about $10 million for road improvements, which incude widening part of Route 1. Construction on the $100 million project is expected to start in May.
Tysons Galleria will have two new high-end retailers opening this summer in the former Victoria's Secret space. The 2,400-square-foot Eileen Fisher, selling the designer's sportswear and accessories, plans to open in early summer 2002. The 2,000-square-foot Stuart Weitzman boutique, which sells high-end women's shoes and accessories, is scheduled to open in midsummer.

Donna De Marco can be reached at 202/636-4884 or at [email protected] Retail and Hospitality runs every other week.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide