For the first holiday season in decades, so many stores are weighing or wallowing in bankruptcy that exactly when to seek a judge's protection from creditors is figuring into competitive decision-making.
Linens 'n Things decided to liquidate now rather than wait to fight competitors' deep price-cuts should a home goods rival file for bankruptcy before Christmas. Now struggling Circuit City, the nation's second-largest consumer electronics chain, is pondering closing 150 of its 714 stores instead of filing for Chapter 11 protection at the height of the critical holiday season, say unnamed sources in the Wall Street Journal.
The chain, which has eight Tampa Bay area stores, hired a Wall Street law firm as bankruptcy counsel to explore the matter, reasoning that people buying big-ticket electronics like HDTV sets might be put off dealing with a store they fear may not be around to back what it sells. Closing stores sooner would help liquidate $350-million in inventory to pay off landlords for busted leases without the stigma and high legal bills of bankruptcy.
Those are just the latest examples of a bunker mentality sweeping across retailing. Tapped-out shoppers show few signs of returning to their free-spending ways. Meantime, the credit crunch and a volatile Wall Street punish poor performers big time.
Circuit City stock closed down 10 percent Monday at 35 cents a share. That means investors value a company with $11-billion in revenue in 2007 at a scant $58.8-million.
They've got company in Rite Aid Corp. The nation's third-largest drugstore chain choked trying to swallow the last 1,500 Eckerd Drug stores in the Midwest and Northeast. Rite Aid is fighting de-listing by the New York Stock Exchange as its shares, which closed at 71 cents Monday, trade below $1. The Rite Aid board hopes shareholders will toss a lifesaver by okaying reverse stock splits to prop up the price.
• • •
Beef 'O' Brady's is spreading its wings into new territory.
With 262 stores mostly in strip centers, the Tampa-based sports bar/pub food franchiser is testing a prototype for hotels and college student centers.
The first tests are at the Best Western Hotel and Conference Center in Brandon, the University of South Florida student center in Tampa and the Tradewinds Island Resort in St. Pete Beach.
"We had a conference at the Tradewinds and spent so much time in the resort sports bar that it struck us they serve the exact same crowd we do," said Nick Vojnovic, Beef's president, noting the USF store, open for two months, is on pace to double the chain's $1-million-a-year average in revenue.
• • •
The owners of an unusual patio decor and garden shop that opened recently in ParkShore Plaza at 300 Beach Drive NE sort of stumbled upon the location.
Davis Freeman and Philip Anthony Weber, who studied design and worked at the Frank Lloyd Wright School, spent a weekend getaway vacation at the nearby Renaissance Vinoy Resort. First they mingled in the throngs at the Saturday Morning Market. On the way back to the hotel, they marveled at crowds wandering Straub Park.
"It felt so much like home we decided on the spot we were coming," Freeman said. "Five months later we're here" as Davis Anthony Home & Garden.
The pair, who run a similar store four times as big in the Old Towne antique/art gallery district of Portsmouth, Va., outfit niche gardens on patios and balconies in apartment buildings and high-rise condos. The selection ranges from inexpensive ceramic pots and window boxes to a $2,400 cast-stone fountain.
Mark Albright can be reached at email@example.com or (727) 893-8252.