FINANCE

Off-price retailer files Chapter 11, plans to close some stores

BY Deena M. Amato-McCoy

With a goal of moving its business forward, National Stores has filed for bankruptcy protection, and will shutter some stores to restructure its debt load.

The off-price retailer, which operates stores under such banners as Fallas, Factory 2-U and Anna’s Linen’s by Fallas, filed for Chapter 11 protection on Monday with plans to close 74 of its 344 locations. Store closing sales will begin on Thursday, Aug. 9.

National Stores is working with its vendors, lenders and other creditors on a reorganization plan that will help the company “return to profitability.” The company has already received a commitment for up to approximately $108 million in debtor-in-possession financing from its existing lenders, according to the retailer.

The discounter blames its financial setbacks on multiple factors, including some underperforming stores, and severe weather in various regions, such as Hurricane Maria, that resulted in the temporary closure of damaged stores. The company also suffered a financial loss from the acquisition of the 78-store chain, Conway Stores in 2014. The company’s financial strain worsened further following the company’s data breach in January, as “access to operating funds diminished.”

“National Stores, historically a profitable company, is committed to improving its financial health and returning to profitability,” said Michael Fallas, National Stores CEO.

“Our goal is to emerge a reorganized company poised to compete in an evolving industry so that we can continue to serve the communities where we are rooted,” he added. “Our employees can be assured that they will continue to receive their salaries and benefits, customers can continue to purchase the items they want … all of our stores will continue to honor gift cards, and we will maintain gift card sales at our remaining stores.”

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FINANCE

San Francisco retail landmark reportedly files Chapter 11

BY CSA Staff

Burdened with debt and falling sales, Gump’s Holdings LLC is the latest department store to file for bankruptcy protection.

The 157-year-old luxury department store, which operates in San Francisco’s Union Square shopping district, filed for Chapter 11 bankruptcy protection late Friday. The company plans to ask the court to approve financing to support it during bankruptcy, according to Bloomberg.

While continuing to find a buyer, Gump’s has also hired liquidators to sell off its merchandise in effort to repay lenders, the report explained.

The company currently has $61 million in assets and $64 million in liabilities, Bloomberg reported.

To read more, click here.

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Toy sales up—and the industry has Toys ‘R’ Us to thank

BY Marianne Wilson

The toy industry is having a comeback, boosted by the liquidation of the Toys “R” Us retail empire. The U.S. toy industry grew its dollar sales by 7% to $7.9 billion in the first half of 2018, a period including the Toys “R” Us liquidation.

“It is likely that the Toys “R” Us news has kept toys top-of-mind for parents and grandparents when shopping for kids in general, benefiting both consumers and the industry,” said Juli Lennett, senior VP and industry advisor, toys, The NPD Group. “I am also convinced that the strong toy industry growth so far this year has been at least partially supported by the empathy that people felt towards losing a store like Toys “R” Us. I think it brought about an emotional response that resulted in parents buying more toys overall.”

The strongest growth driver in the first half came from toys priced $5 to $19.99, led by L.O.L. Surprise!, Total Marvel, Fingerlings, Hatchimals, and Soft N Slo Squishes.

Looking ahead, Lennett predicted that the toy retail space will continue to bustle with activity through the end of 2018.

“Existing toy retailers have announced they will be dedicating more space and will carry more toys this holiday season both in-store and online,” she said. “We’re also seeing new store formats emerge that are more experiential, and we will have new toy retailers entering the space. The industry has shown to be proactive in compensating for the dollars Toys “R” Us has left on the table, and more.”

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