NEW YORK -- In a move to stem the flow of red ink, distressed Paul Harris Stores Inc. will shutter the doors of its downtown flagship in Indianapolis on Jan. 5.
Executives at the bankrupt retailer, which filed for Chapter 11 bankruptcy court protection on Oct. 15, were on vacation this week and unavailable for comment. A spokesman for the company said the closure is part of a package of "40 store" sites that have been targeted for closure. The decision to shutter some of its units is part of the chain's efforts to restructure its business and emerge from bankruptcy. It operated 307 units in 28 states at the end of October.
The 18,156-square-foot downtown site at the corner of S. Meridian and Washington Streets -- a high-rent district -- is too big and too pricy for the retailer's needs, according to the spokesman. "We've found that 4,000 square feet is what we really need," he said.
Since about mid-October, less than half of the unit's space -- about 8,000 square feet -- was used by the chain for its Paul Harris operation. Part of the retail space at one time also housed a J. Peterman in-store shop. As reported, Paul Harris bought the J. Peterman business for $10 million in March 1999, while J. Peterman Co. was still in bankruptcy proceedings.
The original J. Peterman catalog and store operation was known for its offbeat, eclectic assortments, nostalgic items from faraway places and vintage styles. The J. Peterman name gained national recognition after being parodied in the TV sitcom "Seinfeld." J. Peterman filed for Chapter 11 in January 1999.
Paul Harris's current tour of bankruptcy court -- the moderately priced chain previously filed for Chapter 11 in February 1991 and emerged in August 1992 -- does not include any J. Peterman assets. That's because the majority of the J. Peterman assets were sold for $4.3 million prior to the filing. Schottenstein Bernstein Capital Group purchased the intellectual property rights to the J. Peterman name for $700,000.
The spokesman said that the company elected not to close the downtown site until Jan. 5 to give customers time to make holiday returns and exchanges. After the closure, customers can make merchandise returns and exchanges at other Paul Harris stores.The eight employees who still work at the store will either be transferred to other units or obtain employment at the company's headquarters in Indianapolis. "No one [at the store] will lose their jobs," the spokesman emphasized.
Prior to housing the Paul Harris store, the site was the former home of National City Bank. According to the spokesman, the store still retains many of the original architectural features from when the bank was the tenant.
Meeting the same fate as the downtown Indianapolis store is a 14,000-square-foot unit in downtown Chicago at 430 North Michigan Avenue. The site, opened in March 1999, also housed a 1,500-square-foot area dedicated to a J. Peterman in-store shop.
Both stores and 38 others are up for auction under bankruptcy court auspices, according to Mike Matlat, the broker at Keen Realty who is handling the Paul Harris account. The auction is set for Jan. 10. According to Matlat, originally 50 stores were set to close, but the retailer decided to keep 10 after reaching rent reduction agreements with landlords at those sites.
The Paul Harris spokesman said that the retail chain is making every effort to relocate employees at the sites to be auctioned off to other mall stores. "Some have already been moved to the company's headquarters," he noted.
The downtown indie store -- at $20.93 per square foot, with the lease set to end on Oct. 31, 2013 -- is not the priciest of the sites set for auction, according to information from Keen Realty. The one on North Michigan Avenue rents at $40 per square foot, with the lease expiring on Feb. 28, 2014.
Other high-rent locales up for auction are: a unit in the Woodfield Mall in Schaumburg, Ill., 7,275 square feet at $41.02 per square foot, lease expiring on Jan. 31, 2007; Emerald Square in N. Attleboro, Mass., 5,503 square feet at $35 per square foot, lease expiring on Jan. 31, 2007; Woodland Mall in Grand Rapids, Mich., 5,200 square feet at $33.33 per square foot, lease expiring on Jan. 31, 2007; Trumbull Mall in Trumbull, Conn., 4,286 square feet at $30.00 per square foot, lease expiring on Jan. 31, 2008; and Orlando Fashion Square in Orlando, Fla., 3,603 square feet at $30 per square foot, lease expiring on July 31, 2007.Many of the remaining sites -- in Florida, Massachusetts, Maryland, North Carolina and Pennsylvania -- average in the mid-$20s per square foot.
For the quarter ended Oct. 28, the specialty chain known for its privately branded women's apparel and accessories posted a $22.2 million net loss, or $2.03 a diluted share, compared with a $1 million net loss, or 9 cents a share, in the year-ago quarter. Excluding a $3.1 million restructuring charge and $3.8 million in taxes, the loss would have been $15.2 million for the quarter. Sales dropped nearly 7.5 percent to $57.9 million from $62.6 million, while comparative-store sales fell by 8.1 percent.
The quarter's results reflected weak sales resulting from the slow receipt of inventory and nonrecurring costs associated with the sale of the J. Peterman division.
For the nine-month period, the net loss widened to $40.3 million, or $3.69 a diluted share, versus a $904,000 loss, or 8 cents a share, in the comparable 1999 period. Sales inched up nearly 1.5 percent to $180.1 million from $177.5 million.
Paul Harris is in the process of refocusing its merchandising, reducing the careerwear portion of the mix and increasing its sweater and knit categories.
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