Forever 21, Kohl's to Take Over 46 Mervyns Stores
Forever 21 Inc. and Kohl’s have signed an agreement to take over 46 Mervyns stores that are slated to be closed as part of Mervyns’ bankruptcy filing.
The two retailers will assume the leases of the big-box outlets, nearly half of them located in shopping centers owned by The Macerich Co., a real estate investment trust in Santa Monica, Calif.
Forever 21 will move into 15 Mervyns stores, located mostly in California, and Kohl’s, a mid-tier department-store chain in Menomonee Falls, Wis., will occupy 31 stores, said a source familiar with the deal.
Details of the new leases were hammered out Dec. 10 in the New York offices of Morgan Lewis, a law firm.
Mervyns, based in Hayward, Calif., filed for bankruptcy in July. Months later in October, Forever 21 made a bid to buy all 149 stores left in the Mervyns lineup. That bid was unsuccessful.
The average size of the Mervyns stores is about 80,000 square feet, meeting with Forever 21’s desire to launch a department-store concept that will expand its offerings of low-priced but fashionable clothes worn mostly by teen-aged girls. However, the Los Angeles chain is expanding its departments for childrenswear and menswear as well as adding other labels and concepts. It plans to open a 90,000-square-foot flagship store in New York’s Times Square in mid-2010. The Los Angeles retailer, founded by businessman Don Chang in 1984, is expected to have revenues this year of $1.8 billion, compared with $1.2 billion last year.
Kohl’s has been on an aggressive expansion plan, particularly in the West. As of Nov. 1, it had 1,004 stores across the country, compared with 914 a year earlier. While its revenues have been increasing, totaling $16.4 billion in fiscal 2008, compared with $15.6 billion in fiscal 2007, its same-store sales this year have dipped around 6 percent. It has been stocking more name-brand apparel to attract customers. Recently, Kohl’s entered into a multi-year license with Iconix Brand Group Inc. in New York to be the sole retailer, designer and producer of Mudd apparel and other goods.
Kohl’s and Forever 21 are expected to start moving into their new spaces at the beginning of the year. —Deborah Belgum
