Boscov's, the last department store chain based in this region, filed Chapter 11 bankruptcy this morning, seeking protection from creditors while it slims down into a company that can compete successfully and provide high-quality goods and services.
Ken Lakin, chief executive of the Reading-based chain, was said to be touring stores to meet with employees.
The 49-store chain, a presence at most area malls, said in the filing that it plans to close about 10 unprofitable stores after liquidating their inventories with going-out-of-business sales.
The company identified the stores: Langhorne (Oxford Valley Mall) and North Wales (Montgomery Mall), as well as Baltimore (White Marsh Mall); Glen Burnie, Md. (Marley Station Mall); Owings Mills, Md. (Owings Mills Mall); Monroeville, Pa. (Monroeville Mall); Pittsburgh (South Hills Village Mall); Harrisburg (Harrisburg East Mall); Eatontown, N.J. (Monmouth Mall); and Danville, Va. (Piedmont Mall).
This, the filing said, would reduce debt and cut rental payments and other overhead expenses.
While these actions and other cost-cutting initiatives are being implemented, Boscov's said, it will restructure its balance sheet "and create a viable capital structure for long-term profitability," the filing added.
Lakin said today that Boscov's intends to continue sponsoring the Thanksgiving Day Parade in Philadelphia.
As with all bankruptcy proceedings, creditors could consider an offer from a rival or investment fund for the whole chain.
The filing, in U.S. Bankruptcy Court in Wilmington, included a list of the 40 largest amounts owed. This list included providers of merchandise sold in its stores, real estate companies owed rent, and newspaper advertising bills.
The largest amount, $3.1 million, is owed Jones Apparel Group Inc. of Bristol. Nine more creditors also are owed at least $1 million; included in that category were the vendors Dunner, Hanes and Adidas.
Boscov's has had "productive discussions with their major secured and unsecured creditor constituencies regarding restructuring strategies," the filing said.
The company said that, as of May 3, the company had about $538 million in assets and about $479 in liabilities.
The filing indicated that the store owed about $90 million for merchandise and other goods and services.
A creditors committee will be formed to work on a plan and explore other options, the filing said.
Boscov's sought to avoid bankruptcy with a cash infusion from a private-equity deal when the current tough credit market frustrated efforts to obtain financing from traditional lending institutions.
Besides the two that are closing, the Boscov's stores in the region are in Exton, Media, Bensalem, Plymouth Meeting, Pottstown, Atlantic City, Deptford, Voorhees, Moorestown and Vineland.
Al Boscov and brother-in-law Ed Lakin, who built the family chain into regional prominence, cashed out and retired Jan. 31, 2006.
The new chief executive, Lakin, now 54, quickly began rapid expansion. He took advantage of the fact that Federated Department Stores Inc., of Cincinnati, parent of Macy's, acquired the May Co. of St. Louis, which owned the venerable Strawbridge brand in this region.
Federal quickly closed and put up for sale Strawbridge stores in malls that had a Macy's. Boscov's bought 10 of those stores, taking advantage of a surprise opportunity. But this came at a time when Boscov's was trying to replenish cash that it had spent buying out senior members of the founder family.
It expanded in malls at a time when the big complexes were facing stronger competition from Target Brands Inc., and other so-called big-box retailers.
Then came the weakening economy, aggravated by soaring fuel prices.
Brandon Famous, founder of Fameco Real Estate L.P., a leading retail real estate firm, said malls are in a down economy cycle now but remain viable retail venues. Vacancies left by Boscov closures may need to be reconfigured into space for smaller stores, he said.
The mood at Boscov's Moorestown Mall store was somber this morning, with lots of signs advertising sale prices of 60 percent off.
At midmorning, before the company announced the store-closing list, even employees there weren't sure whether their store would remain open. But one manager, who declined to give his name, said that his store was staying open. "We're on track," he said.
"It's a shame because they have good merchandise, especially in the housewares department, for moderate-income people," said one shopper at Moorestown. "I'm saddened by it, but it's just a sign of the economy."
Said one couple: "We've been coming here for 30 years. It used to be the Gimbel's. We've been reading about it. It's a pleasant store."
Ron O'Malley, 73, of Haddon Heights, said: "We've always had a good experience at Boscov's," adding that he had just purchased a TV there. "Now, I'm kind of worried about that," he said, referring to the service contract that he'd purchased along with it.
Asked whether he thought that the store had been empty in the last year, and what it was like shopping in general these days, he said that, even at the Macy's at Echelon Mall, "it's like you're in there alone."