Looks like Gottschalks is safe, at leat for now, due to a $125 million debtor-in-possession credit agreement (Johnson, 2009). The additional money will allow Gottschalks to continue operations during its reorganization process.
What we expect is store closures to boost Gottshalks' balance sheet. The real question is, which ones? Smaller stores are likely targets; even if profitable. Revenues from smaller stores typically aren't enough to keep a company Gottschalks' size afloat.
Stay tuned for more Gottschalks' information as it becomes available.
Scott
Reference
Johnson, K. (2009). Gottschalks gets court's OK on $125M credit line. Sacramento Business Journal. Retrieved from http://sacramento.bizjournals.com/sacramento/stories/2009/02/16/daily68.html?ana=e_du_pub
3 comments:
Frankly, I think Gottschalks should do the opposite.
I'd sell off the big mall stores to Dillards(who I think would still love to be in the Central Valley, despite their problems) and concentrate on the smaller stores in locales where they have little or no competition.
This was the strategy that Gottschalks used 25 years ago, but I think they got lost trying to compete with Macys, especially when Harris, Lamonts, and the demise of Weinstocks gave them opportunities to have bigger stores.
I also think Belk would make a great suitor for many Gottschalks locations. The problem is that there'd be a huge gap between California and Belk's base in the Southeast(though I have seen some Belk stores in Texas)
But without bigger locations, I think Gottschalks could then be set up nicely to merge with or be taken over by someone like Stage Stores, who have mastered the art of small department stores in "out-of-the-way" locations.
But without Stage or another partner, I agree that Gottschalks will take the easy route and just keep the bigger stores. While at the same time butting heads with Macys, JCPenney and Kohls
Stage Stores would be a fine idea, except for the fact that they are often much, much smaller than Gottschalks.
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