Farewell to Gottschalks
After years of trying to bolster its bottom line, Gottschalks, the 105-year-old department-store chain based in Fresno, Calif., is going out of business.
The 55-store chain suffered several setbacks in recent years, such as its delisting from the New York Stock Exchange in November 2008. Executives sought ways to rejuvenate the company, including a recent attempt to secure a $30 million investment from Chinese company Everbright Development Overseas Ltd. Gottschalks declared Chapter 11 bankruptcy on Jan. 14. The company’s chairman, chief executive and president, James Famalette, said all options had been exhausted.
“Despite all our efforts at earnest negotiations, we were unable to reach an agreement with our creditors, lenders and bidders to structure a going concern bid by the court-imposed deadline. Regrettably, liquidation is now the only path for our company,” Famalette said in a statement.
The company agreed for a joint venture of liquidators to auction off the retailer’s stores, its distribution center in Fresno and its equipment. The liquidation companies are SB Capital Group LLC, Tiger Capital Group LLC, Great American Group LLC and Hudson Capital Partners LLC.
Gottschalks’ real estate could potentially be sold to expanding retailers, such as Los Angeles–based Forever 21. But retail analyst and one-time Gottschalks consultant Howard Davidowitz, chairman of Davidowitz & Associates Inc. in New York, said the current credit squeeze will make it tough for retailers to expand. It could be a long time before Gottschalks’ real estate vacancies are filled. Developers might even have to divvy up Gottschalks’ buildings to make the properties more attractive, he said.
Gottschalks’ liquidation leaves a handful of small regional department stores in the United States. Reading, Pa.–based Boscov’s runs 39 department stores in the Northeast while Davenport, Iowa–based Von Maur maintains a fleet of 22 stores in the Midwest. —Andrew Asch
