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Linens 'n Things stores may close

By Mark Albright, Times Staff Writer
In print: Thursday, October 9, 2008

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Linens 'n Things, the country's second-largest housewares retailer, could fold by the end of the year.

The hedge fund that owns Linens 'n Things has asked a Delaware bankruptcy judge to put the company up for a liquidation auction.

Seven of the chain's 31 Florida stores are in the Tampa Bay area. Stores locally already were a promotional riot of buy-one-get-one-at-50-percent-off deals and half-price clearance prices Wednesday.

Some prospective bidders are interested in keeping pieces of the retailer in business in Canada. But most of the company's inventory in the United States is expected to end up in the hands of liquidators who will stage store-closing sales that begin within two weeks.

The company said it wanted to start its going-out-of-business sales soon to get a head start on rival liquidations by competitors by the end of the year.

Bankruptcy Judge Christopher Sontchi on Tuesday took steps to set up a stalking-horse auction.

"First there is weeklong auction process," said Rich Tauberman, a spokesman for Linens Holdings Co. of Clifton, N.J., said in declining to identify interested buyers. "I don't think we can make any comment until the auction is complete."

The prospect of a 371-store chain dropping prices in going-out-of-business sales will make an already difficult retailing climate tougher for Linens 'n Things competitors during the upcoming holiday season.

"It's tragic what's happened to the employees and this business," said Burt Flickinger III, a New York retailing consultant. "But that's what seems to happen when these Wall Street private equity funds think they can run retail companies."

Billionaire Leon Black's Apollo Management acquired Linens 'n Things in 2006 for about $1.3-billion. That was followed by an a series of store closings, continued losses and cost cutting until what had been a 589-store chain that employed about 16,000 filed for protection from creditors in May.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.