San Francisco retail icon in going-out-of-business sale
Time is running out for a 157-year specialty department store retailer that some say failed to change with the times.
Joint venture partners Gordon Brothers and Hilco Merchant Resources on Friday announced the start of going-out-of-business sales at Gump’s, located in San Francisco’s Union Square. Discounts are also being offered on the retailer’s online and and catalog merchandise.
Gump’s, which dates back to 1861, filed for Chapter 11 bankruptcy protection on August 3. The company has been looking to sell its business either in whole or in part, with no success to date.
Gump’s is one of the longest-operating gifts, jewelry and luxury home furnishing retailers in the United States. It sells luxury gifts, jewelry, apparel, artful objects and home décor at its store and also through its website and catalog.
Helen Bulwik, a retail consultant and former Gump’s board member, blamed Gump’s outdated merchandise for its struggles.
“They have focused on a much older customer,” Bulwik told The San Francisco Chronicle. “That makes it very difficult as opposed to evolving with current home furnishings trends. That has hurt them for many years…. I’m not so sure anybody under the age of 50 has set foot in Gump’s at this point, which is unfortunate.”
In the same report, William Noall of Garman Turner Gordon LLP, Gump’s bankruptcy lawyer, said that Gum’s main issue was broadening its customer base with additional merchandise that would appeal to a broader demographic than its core audience.
“That involves risk and takes capital, which the company simply didn’t have,” he said.
Leonard Green & Partners to acquire hot online retailer
The Shade Store is being acquired by a private equity giant in a deal that will boost its growing omnichannel footprint.
The retailer, known for its customized window treatments, has signed a definitive agreement to be acquired by Leonard Green & Partners. The Shade Store is being purchased from Great Hill Partners, which acquired a majority stake in the company in 2013, partnering with the retailer’s co-founders. Financial terms of the transaction were not disclosed.
Founded online in 2006, The Shade Store has grown to more than 60 showrooms nationwide, with a product line that includes shades, draperies and blinds. It offers a wide range of design services for consumers and the design trade, alike , from free swatches and free professional window measurements to photo rendering services and installation services. Customers can choose from more than 1,400 in-stock fabrics and exclusive materials from a range of brands.
“We set out to change the way people shop for the finest custom shades, blinds, and drapery by simplifying and bringing style to a complicated and time-consuming process without sacrificing quality,” said Adam Gibbs, co-founder and CEO of The Shade Store, who will continue to lead the business with the existing management team. “We are expanding our vision nationally, and see tremendous opportunities to continue our growth by entering additional sales channels, launching brand extensions and expanding our strategy into adjacent categories.”
The transaction is subject to customary closing conditions, and is expected to close during the third quarter of 2018.
Party City to team up with Amazon
Party City has joined the growing list of retail companies that are making deals with Amazon.
Amid strong second quarter results, the party supplies retailer and wholesaler announced it is launching a pilot program to sell product on Amazon.com. The pilot will launch in advance of Party City’s biggest selling season—Halloween—and will initially offer a curated assortment focused largely on the costume category.
Party City plans to expand the assortment later this year to include products for Christmas and New Year’s celebrations. Further expansion is possible in 2019.
The deal is the latest example of Party City’s strategy to expand its reach. In June, the company announced plans to open about 50 pop-up stores under the Toy City banner for the holiday season.
“The Amazon pilot we are launching will complement PartyCity.com’s category leading capabilities and serve to advance our overarching strategy of having Party City products available to consumers wherever they choose to shop,” said James M. Harrison, CEO, Party City Holdco. “As a vertical retailer, the program also creates an additional channel of distribution that allows us to leverage our dynamic manufacturing and distribution capabilities while attracting new customers to the Party City brand, including Millennials, who have shown a propensity to shop across online channels.”
More and more retailers are finding it easier to team up with Amazon than just fight it. Sears, Kohl’s, Best Buy, Nike, and Chico’s are among the companies that have deals with the online giant.
In separate news, Party City reported second-quarter earnings and revenue that beat Street expectations. Net income rose to $28.0 million for the quarter ended June 30, from $25.0 million in the year-ago period. Adjusted income per share increased 42.9% to $0.40 from $0.28 in the second quarter of 2017.
Total revenues increased 3.0% to $561.0 million. Retail sales increased 2.9%, driven primarily by square footage growth from store acquisitions.
Same-store sales inched up 0.1% despite headwinds from a shift in the timing of Easter.
“As we enter the third quarter, we continue to make good progress on our strategic growth initiatives and are well-positioned for the upcoming Halloween selling season,” said Harrison. “The recent announcements of the expansion of our seasonal pop-up store offering with 50 Toy City locations and our seasonal pilot program with Amazon will only strengthen the offer for customers. Given performance to date and the outlook for the second half of the year, we are reiterating our full year 2018 guidance.”
Party City’s retail operations include approximately 950 stores (including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites.