Boscov’s Files for Chapter 11
Boscov’s, a regional department store chain headquartered in Exeter Township, Penn., has filed for Chapter 11 bankruptcy protection. As part of its reorganization the company is closing 10 of its 49 stores and has reached an agreement to borrow up to $250 million from a group of lenders including Bank of America.
The chain blamed its problems on decreased consumer spending brought on by increased fuel and food costs along with the collapse of the housing market in the six states where it operates stores. Boscov’s is closing five stores in Pennsylvania, three in Maryland and one each in New Jersey and Virginia.
Last week, Boscov’s CEO Ken Lakin admitted that the chain faced challenges but expressed optimism about its ability to meet them. He told the Reading Eagle, “Sales are weak overall, particularly in the home store, which you can understand: People are not buying houses, they’re not buying sheets or mattresses or beds. As gas prices have gone up, sales have gone down, But we’re not collapsing at all.”
In addition to the current economic stresses, others feel that regional chains have failed to take advantage of their regional connection with customers.
Britt Beemer, chairman of America’s Research Group in Charleston, South Carolina believes that regional chains trimmed services over the years and “basically threw away their main customers.’
Discussion Questions: What do you think are the main causes behind Boscov’s troubles? What do you expect to see from the company coming out of Chapter 11? Do the recent problems of Mervyns and Boscov’s have anything to say about the regional department store business in the U.S.?
- Boscov’s Department Stores Seek Bankruptcy Protection – Bloomberg
- Boscov’s boss says chain is ailing, not failing – Reading Eagle