Retail stalwart files for bankruptcy

Popular clothing retailer Loehmann's filed for bankruptcy.

Discount clothing chain Loehmann's has been outfitting the masses for 92 years, but on Dec. 15, it filed for bankruptcy protection for the third time and said it is prepared to sell its assets to a group of liquidators. Loehmann's Holdings Inc. also tried to sell its businesses last month as a growing concern, according to Reuters, but none of the 39 prospective buyers submitted meaningful bids.

Loehmann's reported that it has between $50 million and $100 million in assets and between $100 million and $500 million in liabilities, according to its bankruptcy petition. Store representatives said it is aiming to sell these by Jan. 7 to stop an "enormous cash drain," Reuters reported, beginning with a Dec. 30 auction.

The retailer is just one of many that recently has succumbed to growing pressure from competitors that are more or less selling similar products at even lower prices.

"The basis of their existence is to compare themselves to regular stores," Howard Davidowitz, a retail consultant, said in an interview with Reuters. "But if regular stores are selling products at the same or lower prices, they're done. We are in the most promotional holiday season in 20 years. That's what Loehmann's ran into, and that's why they filed now."

Some of those major competitors are TJ Maxx, Marshalls and Ross Stores Inc, according to the news outlet. Loehmann's was founded in Brooklyn, N.Y., in 1921 and today has 39 stores in 11 states and Washington, D.C.

The likely eventual vacancy of these stores is sure to mean huge changes for commercial real estate companies in the cities where those stores are located. Many of those stores are located in major U.S. cities like San Francisco, San Diego, Chicago, Detroit and New York City.

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