LAMONTS FILES FOR CHAPTER 11

Byline: Rich Wilner

NEW YORK--Lamonts Apparel Inc., which has been struggling against losses and piles of debt over the past two years, filed for Chapter 11 protection Friday and said it planned to close several unprofitable stores.
Based in Bellevue, Wash., near Seattle, the 48-store West Coast chain will also use the court-protected reorganization to revamp its merchandise mix toward more casual apparel.
Alan Schlesinger, chairman, president and chief executive officer, said Friday that the 41 stores in the continental U.S. will drop cosmetics, scale back on vendors and concentrate on trends and Northwest-style apparel.
The retailer said its secured lender, Foothill Capital Corp., has agreed to provide up to $32 million in debtor-in-possession financing to keep vendors shipping.
"The Chapter 11 [filing] gives us the necessary time to streamline the company and revitalize our business so we can serve the best interests of our constituents," Schlesinger said.
Schlesinger joined Lamonts in November, shortly after the retailer closed eight stores, including a five-store pilot children's chain, in an effort to turn around the company.
In October, Lamonts took $62 million in debt and subordinated it to the trade in an effort to prop up its balance sheets and insure the flow of goods. However, several factors still didn't OK shipments, although some vendors still moved goods.
Lamonts currently has about $66 million in unsecured debt which it hopes to convert to equity through its reorganization process. In bankruptcy court papers, Lamonts listed liabilities of $139.4 million and assets of $169.9 million.
In the third quarter ended July 30, the retailer reported an operating loss of $5.6 million while sales declined 6.3 percent to $55 million.
In three of the past four years, Lamonts has lost a total of $31.8 million on stagnant sales of about $251 million. Along with the Chapter 11 petition, Lamonts has asked Bankruptcy Court Judge Thomas Glover for permission to shut six stores and run going-out-of-business sales beginning Jan. 21.
"One of our weaknesses is that we tried to be all things to all people in just 45,000 square feet," Schlesinger said. "We should be dominant in jeans and Northwest looks, be more agile and into trends and be more promotional--not off-price, but more promotional everyday like department stores have become."--Fairchild News Service

To access this article, click here to subscribe or to log in.

load comments
blog comments powered by Disqus