NEW YORK -- GE Capital Corp. has finally pulled the plug on Wards.
The 128-year-old, 250-unit chain, once a giant among retailers, said Thursday that it would end operations and filed for Chapter 11 bankruptcy protection for the second time in three years.
The action, affecting some 28,000 employees, confirmed an exclusive WWD report on Wednesday that Wards would go out of business.
The dire news about Wards, along with recent disclosures that Bradlees was liquidating, Paul Harris is shutting some 40 stores, and that just about all of retail had a disappointing holiday season, from Gap to Wal-Mart to Neiman Marcus, compounds the bleak outlook for the industry.
According to analysts and retailers contacted this week, additional consolidations and difficult sales are expected at least through the first half of 2001, with the economy expected to continue to slow. Retailers are hoping that interest rates are cut soon to stimulate spending.
For a nation that's been long over-stored, the fallout could be healthy for the survivors in the long run and free up some talent, though it's certainly not for those losing jobs and money in the near term.
Wards, a fully owned, Chicago-based unit of GE Capital, said it would suspend further unpaid vendor deliveries and quickly eliminate about 450 corporate jobs. Most of the company's stores and 10 distribution centers in 30 states are seen closing over the next few months.
When reports of Wards imminent demise began circulating this week, industry sources expressed surprise that the chain lasted as long as it did. During the Eighties and Nineties, when it was known as Montgomery Ward, it got beaten down by rising competition with customers defecting to stores offering better values and stronger brands, such as Wal-Mart, Kmart, Sears and Target.
Its direction became uncertain, complicated by high management turnover and frustrations over declining performances. Wards first went into Chapter 11 in July 1997 and emerged from bankruptcy in August 1999.
"It was an irrelevant company," said Walter Loeb, of Loeb Associates. "There was no longer any reason for Wards to exist, except GE maintained the company because of the credit Wards extended to its customers."
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