By  on February 12, 2009

After buying back the Mervyns name, the founding family of the liquidated department store chain sees an opportunity to open stores in the distressed retail real estate market.

However, some retail analysts expressed skepticism about the move.

John Morris, whose father, Mervin Morris, launched the Hayward, Calif.-based chain in 1949, said Wednesday that the growing number of empty mall stores would work to the family’s advantage.

“The timing is terrific for real estate, and it will only get better because all the malls have holes in them right now,” he said. “My father was an outstanding merchant, and that’s something that private equity or hedge funds, for all their financial expertise, can’t duplicate. It takes an amazing merchant to run a retail chain.”

Morris, who, with his twin brother, Jim, and younger brother, Jeff, bought the rights to the Mervyns name and its Web-related intellectual properties on Tuesday for an undisclosed sum, said, “We’re really just getting started on the planning stages and figuring out exactly what it is we want this to look like. There is value in this name. We had a very strong and very loyal following,” especially in the West and in California.

But analysts said trying to revive even a recognized retail brand like Mervyns will be tough, especially in a dismal economy and with competitors such as Ross Stores Inc. that have gained market share.

“We have seen in almost every region of the country well-known retailers go under and not be missed,” said Richard Kestenbaum, a partner at Triangle Capital LLC. “There are others out there to take up that market share. The Mervyns concept faces too much competition.”

Citing the reinvention of the Cleveland Browns football team after the original franchise moved to Baltimore, Atlanta-based retail and real estate consultant Alan Barocas said: “It’s about how they go back into the business, what their concept is and how their balance sheet looks. There’s certainly room for value-priced retailers on an ongoing basis, especially when you look at some of the other stores poised to go under now.”

Another matter is how Morris and his brothers would stock brick-and-mortar or online stores, since they did not purchase Mervyns’ in-house clothing brands. Should the family open retail locations, Morris said, they would welcome the chance to work with the vendors who bought the brands.

One Step Up acquired women’s brand Hillard & Hansen, teen label ellemenno and men’s line Cambridge & Sussex, said Gabe Fried of intellectual property firm Streambank LLC, which brokered the deal.

“House brand for a lot of people is a dirty word, but many are achieving good sales numbers and excellent margins,” Fried said. “In the past few days, we’ve had [former Mervyns] consumers reach out to us asking where they can find these brands.”

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