58.9 F
San Diego
Tuesday, Mar 19, 2024
-Advertisement-

Retail Montgomery Ward prepares for final sale



Retail: More Than 130 Years of History Ends With Chain’s Bankruptcy

In a matter of months or even weeks, a department store that has been in existence for more than a century will close its doors forever.

Montgomery Ward & Co. entered Chapter 11 bankruptcy Dec. 28. Each of the 250 stores is holding a “going out of business” sale, said Chuck Middle, a spokesman for the Chicago-based company.

For the stores in San Diego County , in Mission Valley, La Mesa and Escondido ,Middle did not have a closing date. That depends on how quickly the merchandise in each store moves, he said.

“When the store sells its merchandise out, then we will close that store. And we will continue that until we have closed all our stores, and then we will dispose of the real estate,” Middle said.

Once that happens, Wards will cease to exist, he said.

Middle wasn’t able to pin the cause of the bankruptcy declaration on any one factor, but said a major reason was the slowing of the economy that caused a noticeable dip in sales in October and November. The Christmas season was good, but not enough to offset the losses in the months prior to that, he said.

Middle noted Wards recently completed a major remodel in 76 stores, which continued to do very well. Still, the company looked at its overall picture and decided to fold.

No local representatives from Wards spoke about the pending closure. All calls were referred to the company’s Chicago headquarters.


Department Store Woes

George Whalin, president and CEO of San Marcos-based Retail Management Consultants, said Wards is one of many department stores that have either declared bankruptcy or had financial troubles recently. However, this is not necessarily part of a trend pointing to the failure of department stores in general.

“If you look at the Sears issue and the J.C. Penney issue the Wards thing is unique unto itself,” he said.

In the case of Sears, the company closed its specialty stores, such as tire stores. Only a handful of the department stores closed down, Whalin said.

J.C. Penney, meanwhile, has been in a slump. Unlike Sears, which has a wide selection of merchandise, J.C. Penney focuses on apparel.

“That’s a very difficult niche, because you’re up against Macy’s, Bloomingdale’s and you’re up against Nordstrom. And there’s nothing terribly distinctive in the J.C. Penney stores.”


Long History Of Problems

Wards’ problems were their own, and they have been a long time coming, he said.

“They have been in trouble for 10-12 years , haven’t made a profit in at least that long, and have not been an important part of the retail industry for a long time. So them going out of business is not much of a surprise.”

The company wasn’t able to define itself, Whalin said. They failed to bring something new to the marketplace that wasn’t already at stores like Mervyns or Target.

Also, “regional discounters” have long had financial problems. Bradlees’, in the Northeast, is going out of business, while Venture closed its Midwest stores a few years ago, he said.

Although Wards had stores nationwide, with only 250 locations, it was roughly in the same tier as the regional discounters, Whalin said.

“That whole segment has had problems competing with the Wal-Marts and the Targets and the Kmarts of the world,” he said.

Added to that, Montgomery Ward management was blind to many industry trends. Many of their stores hadn’t been remodeled in more than 10 years, Whalin said.

“There was no clarity of who they were for a long time and what they stood for,” he said. “They were in the consumer electronics business for a long time in a big way, and they were going up against national chains, which were just killing them.”

Meanwhile, they were up against the Wal-Marts, Targets and Costcos of the world. These stores had a distinctive identity, and have all done very well, Whalin said.

Other sectors of the economy have been less problematic. The Internet has not had much of an effect on department stores, capturing about 2 percent of the overall retail market, he said.

Also, the products people tend to buy over the Internet are “specialty items” such as books and CDs. These have even less of an effect on sales at department stores, Whalin said.

The high price of real estate is also not much of a factor affecting department stores, since most of them are very well ensconced. However, department store closures such as Wards may have an effect on the cost of real estate, and Whalin expects the price for commercial real estate to fall for the first time in several years.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-