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Wards to shut stores

A sluggish holiday season deals a death blow to the already-struggling retailer and its 28,000 employees.

A lackluster holiday shopping season claimed a big victim Thursday as long-struggling Montgomery Ward LLC filed for bankruptcy court protection and said the 128-year-old retail chain will go out of business by spring.

Nationally, the closing of all 250 Ward stores in 30 states will cost 28,000 employees their jobs. In the Tampa Bay area, the decision affects about 1,000 people and creates gaping holes in five malls and shopping centers, from Crossroads Shopping Center in St. Petersburg to University Mall in Tampa to Gulf View Square in Port Richey.

Wards becomes the last of four deparment stores to check out of the mostly vacant Clearwater Mall.

The chain's demise also will mean the loss of its regional distribution center in Tampa, which serves the company's 10 stores in Florida.

Once a leading name in retailing, Wards pioneered the mail-order catalog in 1872 (22 years before Sears) and gave the Christmas holidays Rudolph the Red-Nosed Reindeer in a 1939 advertising jingle. But over the past decade Wards has done nothing but shrink as managers sought in vain a way back to prosperity. Just three years ago _ when Wards previously filed for bankruptcy protection _ the chain had 450 stores.

"Sadly, today's action is unavoidable," said Wards' chief executive Roger Goddu. "We have not delivered the necessary financial result to warrant completion of our company turnaround strategy."

GE Capital Credit, which controls the privately held chain and owns its credit card operation and direct marketing arm, decided abruptly to pull the plug after a holiday season in which Wards fell far short of a planned 9 percent sales gain. Instead, the nation's 62nd biggest retailer reported a milquetoast 2 percent gain.

Word that the end was at hand filtered out in dribs and drabs Thursday. At the company's Chicago headquarters, where 450 employees were fired immediately, scores of workers left with boxes in their hands before the company issued a public statement. At the store in Port Richey that was only weeks away from a $2-million renovation, employees learned of the decision on TV news broadcasts in the electronics department. At University Mall in Tampa, employees didn't get the official word until after a late afternoon conference call from Chicago.

"There was always talk going around, but I never believed it," said Veronica Howell, who has worked at the Port Richey store since it opened in 1980. "There was a slowing down (in business this Christmas), but I thought every other retailer was slowing down, too. I'm going to miss this place."

Wards' Chapter 11 filing Thursday will become the forum for unraveling the company, selling its remaining real estate, settling with creditors that include GE Capital and overseeing going-out-of-business sales. The company did not say when the stores will close, only that the distribution centers will be shuttered in the first or second quarters of 2001.

In a Chapter 11 proceeding, trade creditors such as vendors, advertising media and other unsecured creditors become priority creditors but usually lose money on bills they let run up before the date of the filing.

"It's sad," said Gerald Divaris, chairman and chief executive of Virginia Beach-based Divaris Real Estate, which will lose one of three anchor tenants at its Pinellas ParkSide in Pinellas Park. "I think we'll be able to find one or two of several chains that are expanding to fill the space. We will have to reconfigure the space Wards occupies, however."

Divaris three years ago asked Wards to leave to provide space for a new theater. The retailer was generating only $103 a square foot in sales - one-third the productivity of a conventional mall department store. But Wards, which was in bankruptcy and said the store was profitable, wanted $1-million to leave.

Wards' decline began in the 1980s while it was owned by Mobil Oil Corp. Bernard Brennan, whose brother William ran cross-town rival Sears, Roebuck & Co., led a management group that took Wards private in 1988. He made Wards a collection of large stores within a store _ electronics like a Circuit City, home furnishings like a Rooms to Go and apparel like a Target discount store. By 1997, Brennan was replaced by Goddu, who sought to make Wards a destination for lower-middle-class shoppers and tried to appeal to a younger urban customer.

In 1999, after emerging from bankruptcy, Wards lost $200,000 on revenues of $3.1-billion. Goddu had mapped a turnaround plan for the rest of the chain, pending a solid Christmas.

"Wards simply lost its reason for being," said Kurt Barnard, publisher of Barnard's Retail Marketing Report. "They totally failed to establish an identity or niche that would have made Wards stand out against the domination of its old market by Sears. They never gave people a reason to shop there."

The store-within-store strategy was killed by brutal competition including discounters such as Target and Wal-Mart that continue to gain market share in budget-priced apparel sales.

Some customers were shocked.

"I love this store," Kim Setzer, a professed "jewelry-holic" who lives in New Tampa, said as she effused about saving $50 on a Seiko watch over three competitors.

"We like Wards better than Sears or JCPenney," Tony Czarnopis said at the Crossroads store in St. Petersburg, tapping a watch he bought at Wards five years ago with a seven-year warranty. "Last year I sent the watch in to be fixed and they sent me a new one. You see how good they are."

"We purchase furniture here," said St. Petersburg resident Bruce Kaczmarek, "We used to go to Roberds (which went out of business last spring). I don't know where we're going to next. We're running out of places."

Other customers, however, thought Wards was living on borrowed time.

While Linda Mahoney of Lakeland complained about Wards service and return policies, her husband, Jim, noted he waited several minutes to be helped at the University Mall store while three clerks sat nearby. "They never got out of their chairs," he said.

Bay area

Wards stores

St. Petersburg

Crossroads Shopping Center

Outlet center on 34th Street at First Avenue N

Pinellas Park

Pinellas ParkSide


Clearwater Mall


University Mall

Port Richey

Gulf View Square

_ Times staff writers Jennifer Golblatt, Michael Braga and Jeff Harrington contributed to this report.