Mervyns LLC, the popular department store chain that filed for
Chapter 11 bankruptcy back in July, plans to close all of its remaining retail stores after the holiday season.
According to the Associated Press, Mervyns, which has been in operation for over 50 years, plans to begin liquidation sales at its remaining 149 stores.
"We are disappointed with this outcome but the company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action," said John Goodman, chief executive of Mervyns. "We are confident that the deep discounts available through going out of business sales will drive significant traffic in our stores."
The U.S. Commerce Department recently said retail spending has dropped by 1.2 percent, the largest decline in three years.
The company acknowledged that a fierce retail market and declining liquidity were two factors that contributed to the bankruptcy filing. Furthermore, the retailer had seen sales drop further due to the retail slump hitting many families. Mervyns main clientele are middle and low income families who live in many of the areas hit hardest by the economic troubles plaguing the country.
The retail store has also been struggling in recent years due to the combination of high-end department stores and discount retail chains such as Wal-Mart and Kohl's. Some experts say Mervyns had a hard time competing with these stores that sold similar products at a similar price but had more consumer appeal.
"They couldn't differentiate themselves from any of their competition. If you took away the element of price, the product Mervyns has been selling could be found anywhere," said Harry Bernard of Colton Bernard, Inc., a retail consulting firm in San Francisco.
After a number of private equity players bought Mervyns from Target Corp for $1.2 billion in 2005, Mervyns began closing stores in states such as Oregon and Washington. According the report from the Associated Press, Mervyns sued the private firms, alleging the deal stripped the retailer of its real estate assets and forced it into bankruptcy.
There were around 1800 employees working for the retailer at the time of the bankruptcy filing. Many have expressed their disappointment and sorrow over the closing of the store.
"It's a sad day for us because it was a great company to work for," said Ruby, a Mervyns employee in Orinda, Calif. who didn't want give her last name. "We were hoping for the best. A lot of us have worked here for many years."
Other well-known retailers that have recently filed for bankruptcy include Linens N' Things, Shoe Pavilion Inc., Sharper Image Inc., and Steve and Barry's.
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