consumer products: March 2009 Archives

This is a strange one. Dial-a-Mattress, infamous for their late-night commercials, saw sales fall to $100 million, from $170 million two years ago, and now:

Creditors filed an involuntary Chapter 7 bankruptcy petition against Dial-a-Mattress last week, seeking $1.7 million. The company is seeking to convert that to a Chapter 11 reorganization.

Sleepy's said in a statement on Tuesday that it would provide debtor-in-possession financing to help Dial-a-Mattress operate. The financing is subject to bankruptcy court approval.

Barnes and Noble may be cutting hours of stores in order to keep doors open, but Borders, about to announce its 4th quarter of '08 numbers, has another plan, to be revealed next week. We're thinking "slash and burn" is the plan. Its stock is trading at 69 cents. It had terrible holiday numbers. And:

Borders also is expected to ask shareholders to approve a reverse stock split at its annual meeting on May 21 to use if necessary to push the share price above $1 and avoid delisting.

Famed luxury goods purveyor Tiffany might look immune to the recession but actually they are in a world of trouble. "Net income fell to $31.1 million, or 25 cents per share, down from $127.4 million," for one thing; these costs are associated with store closing and with layoffs. So what's Tiffany's solution? More layoffs! "Tiffany plans to offer early retirement packages to 800 of its employees in the U.S., and cut 10% of its staff worldwide." Great plan.

You may not have expected to see the recession come to Reno and Vegas, and yet! Herbst Gaming will lose control of its 15 casinos in Nevada, Iowa and Missouri in its new bankruptcy filing; the company blames its expensive expansion in the Nevada market in 2007. And extremely troubled Progressive Gaming, which at one time provided gaming systems for casinos, filed for liquidation this week.

The failure of a large chain like Circuit City means a competitive segment has an opening to be filled. After all, Best Buy can't be the only option for electronics retailing forever.

And so the market will slowly see companies begin to fill that void, starting in Connecticut, where PC. Richard & Son is expanding, opening a store in Norwalk. P.C. Richard is a 100-year old company that has grown slowly and locally in the New York metropolitan area. Now with 52 stores, it has the mass to continue its expansion into places where competition is light.

Expect to see more reports like this as the economy settles down and smaller companies decide to challenge the remaining national brands.

The economic downturn is hitting local stores especially hard. Saddest among those affected are the decades-old establishments suddenly facing bankruptcy or liquidation. Recent news affects regional chains with long histories:

• Cincinnati: luggage store Bankhardt's is closing. The store is 130 years old and has inhabited the same location since 1935. The business owner sold the building and is moving on. Interestingly, three splinter stores with the same name will continue to operate.
• The 16-store jewelry chain Robbins Brothers filed for bankruptcy after struggling during the recession. Robbins Bros' history dates to the 1920s, in Seattle, before moving to California and ultimately expanding to four states.
• In the Pacific Northwest, Joe's Sports and Outdoor is operating during a restructuring. The 30-store chain is owned by a private equity firm that filed as a strategic move. Joe's first opened in 1952 as a military surplus store.