NEW YORK — Searle, the Manhattan specialty retailer known for its coats, has filed for bankruptcy court protection.
This story first appeared in the January 12, 2009 issue of WWD. Subscribe Today.
The filing on Wednesday in a Manhattan bankruptcy court, under the name Searle Blatt & Co. Ltd., was a voluntary Chapter 11 petition. Also filing was an affiliate firm, Tom Jones Inc. The filing listed assets of between $1 million and $10 million, and liabilities in the same range.
Searle manufactures women’s ready-to-wear apparel and accessories, which are sold in the stores, under the Searle label, while Tom Jones operates the seven Searle retail sites in New York as well as the brand’s Web site. There are also two nonfiling affiliates, MBU Inc., which manufactures coats and sportswear, and 119 Corp., which produces shearling coats and outerwear.
“The debtors have been adversely impacted by the recent economic downturn,” Searle Blatt, president of both debtors, said in an affidavit. “Sales have dropped dramatically over the past 12 months. The holiday season, historically the high point of the year, did not reverse the trend, and the debtors were forced to reorganize.” Blatt said the debtors intend to continue operating their businesses.
“Everything is being reevaluated, but we haven’t made any decisions yet,” said Rick Weinstein, Searle’s director of sales and marketing. Asked whether Searle would consider shedding any of its locations, Weinstein said: “We are considering everything.”
Retail experts predicted a spate of bankruptcies this month, following a dismal holiday season. “I am not surprised,” said Walter Loeb, president of Loeb Associates. “Bills had to be paid by Jan. 10. People that are highly leveraged may not find it possible to pay and seek court protection.”
Weinstein said the brutal economic environment that caused consumers to rein in spending led to the filing. “Every definition of the business environment has changed,” he said.
Founded as T. Jones in the early Sixties by Blatt, the company changed its name to Searle in the early Eighties. The retail expansion occurred over the next two decades. After the first store opened on Third Avenue and 62nd Street, two additional units bowed in close proximity on Third Avenue. Three units on Madison Avenue between 60th and 84th streets opened, along with a store in the FlatIron District. Gary Alterman, senior vice president of Robert K. Futterman & Assoc., said Searle locations are all excellent and “most have older leases so the company isn’t paying the crazy current rents.”
Searle in 2006 began taking a more daring buying approach with an emphasis on European designer, bridge and contemporary lines. “I’m comfortable with our merchandise [mix],” said Weinstein, who noted the Searle label now represents 60 percent of the stores’ product. “We’ve really played up Searle in the last year,” he said. “Now that we’re wholesaling around the country, it’s enabled us to get behind the production and do more for our own stores.”
While there was a dearth of traffic prior to Christmas, post-holiday traffic is strong. This might have to do with the fact that Searle is promoting a sale during which merchandise is reduced by up to 80 percent. “A smart retailer finds the price at which the merchandise will move,” Weinstein said. “The customer is responding.
Searle’s secured creditors listed are Bank Leumi, owed $961,500, and Credit Cash, owed $282,000. The top unsecured creditor is listed as Easter State Health & Welfare Fund, which is owed $219,967.80. Its second top unsecured creditor is accounting firm Marks Paneth & Shron in New York, which is owed $92,000. Other creditors listed each were owed less than $50,000, with many owed less than $20,000.
Searle said it has two pending lawsuits, both filed last year. One is in a state court in Queens and the other, a state court in Manhattan. There was no information regarding the nature of those lawsuits.