Mervyn's & Linens N Things are going out of business

[Max]

Mervyn's and Linens N Things have just announced that they are going out of business. (For those of you who have never heard of Mervyn's, it is a department store that is very similar to Kohl's. Unlike Kohl's, however, Mervyn's only has locations in the western US, primarily in California. The store actually once had a presence in many other states, but difficult times forced them to pull out of those places long ago.) And, while I'm not surprised that either is closing, I must say I am surprised that they chose to cease operations before Christmas.

With this terrible economy, it is a given that so many more retailers will soon go out of business. One retailer that I am certain is a goner will be Boscov's. (Boscov's is a regional mid-range department store, with stores primarily in Pennsylvania and additional locations in the other Mid-Atlantic states. It's actually my favorite department store, because they sell lines of merchandise that all other department stores--aside from Sears--gave up long ago: electronics, large appliances, sporting goods, toys, furniture, and candy.) Before the stock market crashed in September, Boscov's had already filed for Chapter 11 Bankruptcy and closed ten of its stores; the chain's situation was so dire that many of its suppliers had stopped shipping new merchandise to them. In fact, before this economic crisis, Boscov's had no better than a 50% chance of surviving. However, the moment the stock market crashed, I knew it was completely doomed.

Two more retailers I predict will soon go out of business are Circuit City and Borders. Both of these chains had been in trouble for a long time, and were getting clobbered by their primary rivals: Best Buy and Barnes & Noble, respectively. Upon going out of business, I expect these rivals to move into many of the more desirable Circuit City and Borders locations. Additionaly, I would not at all be surprised to see the Gap go out of business. That chain has been struggling for some time, and has long lost its one-time reputation as a fashion leader.

My biggest fear is that Sears (and Kmart, which is owned by the same company) will also go out of business (although, the chances of Sears going out of business are far less than that of the other stores I previously mentioned). Should Sears shut its doors, so many shopping malls in the United States would be doomed (since it would be next to impossible for them to fill the huge vacant space it would create). Yet, it is a definate possibility, since this chain has been struggling for years. (It certainly doesn't help matters that the company's CEO is a total zero. Instead of focusing on retail, all he seems to care about is bolstering the real estate value of Sears' locations.) And because Sears is so heavily focused on hard goods like electronics and appliances, it makes things especially precarious for them (given the fact that since so few are buying houses, consumers obviously are not buying the big ticket items necessary to furinsh a home).

[David_Vickers]

I agree that some of those you mentioned will probably follow. I don't thnk Sears will be, although I can see them closing K-Mart, I know the K-Marts in my area have gone down hill in quality over the last 10 years, especially clothing.

This is all due to the horrible economy thanks in large part to the George W. Bush/Dick Cheney administration and the GOP's former control of the House and Senate. It's going to take quite awhile to right the wrongs of this horrible admin. Maybe 6-12 months before things start getting some better. I think the next few months Nov-Feb especially will be bad.

[bandbfan]

Linens 'N Things probably doesn't have a choice. As I understand, they're liquidating everything because of pressure to pay their debts. They probably want the money as soon as they can get it. Staying open another 2 months probably isn't worth it.

I doubt Sears is going anywhere. I'm sure they'll close under-performing stores, but I doubt this will bring them under. They're still messing around with formats and no doubt will shake out something that works.

I don't know why Best Buy would move into any Circuit City stores. In my area at least, the CC stores are much smaller.

The Gap going under would just further push malls downward. There are so many variations of Gap that bring many and different kinds of shoppers (albeit not as many anymore obviously) to the mall. Speaking of the mall, I wouldn't be surprised to see some of these shoe store chains take each other down. There are SO many shoe stores that are essentially the same (Footlocker, Finish Line, Champs, etc) that canabalize each other.

[Max]

Mulder, I'm in complete agreement with you regarding the fact that the period from November to February is going to be awful. In fact, since this Christmas shopping season will no doubt be the worst on record, I can understand why Mervyn's and Linens N Things don't even want to wait until after Christmas to start liquidating.

And BandBfan made an excellent point about Sears always messing around with store formats. There have been so many experimental store prototypes over the years, yet the company never follows through on any of them. (My favorite of these prototypes can be found at a Sears in Duluth, GA. That particular store has a much fancier look to it along with more spacious departments, and features throwbacks to the 50's such as a scripted logo and an in-store candy counter.)

Also, another retailer that I think will bite the dust is Steve & Barry's, since that chain had been on life support for months before the stock market crashed.

[Tishy]

I know that in my area, Sears took over Kmart. It was a couple years ago Sears bought completely revamped the Kmart in my town, brought in the Sears brands and it is now Sears. It is actually doing better than it was. I say this because no one used to go there, the parking lot was empty. Now, you can't find a parking place.

I am wondering about TJ MAxx. Their stock must have plummeted when the news of the credit card security breach came to light. When I go there, which is hardly ever, I only use cash now. Another place is Hannafords, which is a grocery store in the Northeast. They had a huge security breach. Tens of thousands of credit card numbers were stolen over a fairly long period of time. It was so massive that it took months for the banks to notify some customers that their debit cards were comprimised. Immediately I closed my bank account, but I have gone back to writing checks in some places.

I have heard rumors that Borders was going to close. Starbucks recently closed 600 stores as well. I'm sad about Linens N Things, because I love that store

[bandbfan]

They're doing the "Great Indoors" stores which is all very high end appliances. And then Sears Grand is supposedly like a normal Sears plus basically what Target has (small electronics, books, select groceries, etc). Who knows how those are working, especially TGI stores with the economy.

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Also, the KMart CEO actually aquired Sears. They used Sears for the new name. It's just odd because you'd think KMart was the lesser performer buying a better company.

[SnCCorinthos4ever]

Alot of Starbucks stores in Australia are closing their doors and that was about 6 months ago but that was happening before this economy stuff happened.

The same with our Target and Kmart stores some are closing down.

I really hope Sear's don't close down as I know that they do a lot of good for people in the USA especially those that really need it.

But the one thing is you can bet on is that the CEO's of these company's will still have their big payouts.

[EricaKane70]

I think stores like kohls, gourman's, bestbuy, walmart, and target have nothing to worry about.imo Stores like Bed,bath,&beyond, sporting goods stores, and jcpennys should worry. Those are the stores that tend not to budge on their prices that much, the stores I first mentioned have great deals during the holidays and are pretty consistent with having good sales/clearances in my experience.

[bandbfan]

For some reason, I think that the CEO of Sears/K is paid only with stock.

[Greg's GL]

There are several Gap stores that have closed here in the Orlando area. There are only 3 left here from the 10 that were around when I first moved here 15 years ago.

The Sears/Kmart situation, IMHO, is precarious. Since the merger, several Kmarts closed for good - one right near my old home. The remaining Kmarts that I've been to look dirty and cluttered. Not to mention they still have the cafeterias that used to be popular in those stores in the early 80s. A few of the old Kmarts were transformed into "Sears Essentials" stores. They look a lot better than the Kmart brand, like the company is investing in them.

I think the problems will hit the speciality stores first, like Gap. I think Express might be in trouble. And Pier 1 Imports has been having problems for a long time now. They seem especially vulnerable now with the rise in popularity of World Market. Of the other Gap-owned labels, Old Navy is probably the only safe one. Banana Republic is facing downward sales as well, but I don't think they're ready to close any of those stores. It's still a popular label for the most part.

Jewelry stores are in bad shape with this economy as well. Really, whose going to spend thousands on a ring or necklace besides the ultra-rich? Middle income people certainly can't afford to do so. In particular, Whitehall Jewelers are closing around here and I think Mayor's could be closing some stores soon as well.

It's a scary time out there!

[cct]

Anyone who relies on a mall is in trouble. Malls have been on a downward slide since the mid-90s. The latest thing is "outdoor malls" as they have in California. But I still don't hear people saying they are actually shopping there, just "spending time" or going to the movie theater there. Gaps, Express, Banana Republics, and even Sears are mostly in malls.

Many stores grow too big, too fast. They fail to concentrate on customer service and keeping their existing stores clean and well-stocked. Then when times are hard, they cut back (Starbucks) or disappear altogether (Linens and Things). There's only so much competition the market can handle.

[bandbfan]

I think Sears are about half and half, in malls and out of them.

Starbucks actually started cutting back earlier this year, before the market took the big drop. (Although one could argue we haven't been that great this whole year).

The "lifestyle center" outdoor malls are the ones that have been growing so much. They're more popular than traditional malls, but current conditions aren't helping them either.

[Wales2004]

The closest two malls to me has lost, over the years, a Broadway, Robinson's-May, JC Penney, both Miller's Outpost stores, Compusa, another specialty electronics store the name of which escapes me, Electronics Boutique, Borders with cafe and a Borders outlet which was a B Dalton's, and most recently Linens 'n Things. One of the malls had a Robinson's-May and a Macy's and initially Macy's tried to maintain both locations as Macy's but eventually extended the larger store (which was the Robinson's-May a bit further into the mall and closed the other store. I don't think they were doing that well before so now it's got to be worse and the enticing thing about Robinson's was they had good sales and coupons frequently which Macy's seems to be trying out now to some degree.

The local Kmart tried going to Big K before it closed down earlier this year. I think their partnership with Martha Stewart did little for them and Wal-Mart put a dent in their business as well. JC Penney may go before Sears if either of them goes within the next couple of years.

Circuit City has scaled back quite a bit. I think they were somewhat able to keep up with Best Buy but Fry's impacted both stores along with Compusa. There was that chain Good Guys that dealt in higher end electronics at one point but those kinds of stores don't have longevity and are the most vulnerable in bad economic times. Best Buy does have an edge over Circuit City but Fry's does pretty well too and has a greater inventory. With price matching people probably opt for the more customer friendly stores though and in that respect Circuit City and Best Buy has the definite edge over Fry's.

[jcar03]

Some stores don't have much to worry about.

Wal-Mart for example actually does better when the economy slows because just about all their stores are Super Wal-marts and it a one stop shop for most people.

[JackPeyton]

I use to work for Mervyns. Int he back,. Just scanning things. It was an awful place to work.

I also use to work at LNT. I helped open a new store. It was also a awful palce to work.

and since K-Mart/Sears have been brought up, i use to work at eack. Sears? crap. K-Mart? My fave job ever.

As for the news, i have knowen for some time because LNT sent me a letter telling me about some class action lawsuit against them for not paying overtime and that theyw ere closing. And Mervyns i knew about because the stores out here had huge closing sales.

Khols & Bed, bath, & beyond are better IMHO.