The ever-expanding Forever 21 could quickly add to its door count on the West Coast if a Delaware bankruptcy court approves its $17.7 million bid for 17 Gottschalks stores.
According to court documents filed on May 21 in U.S. Bankruptcy Court in Delaware, the Los Angeles-based retailer is the stalking horse bidder for the properties, which range geographically from Hemet, Calif., to Anchorage, Alaska.
If the deal is approved, Forever 21 Inc. would buy three California locations outright and assume the leases on 14 other Gottschalks stores. The Fresno, Calif.-based department store chain filed for Chapter 11 protection on Jan. 14, the same day that Goody’s Family Clothing Inc. entered Chapter 11 for a second time. Goody’s has since been liquidated.
A consortium of liquidators including Great American Group, Tiger Capital Group, SB Capital Group and Hudson Capital Partners is winding down operations at 58 Gottschalks stores in six Western states.
It would not be the first time Forever 21 has expanded through the insolvency of a competitor. In December, the company placed a similar bid on 15 former Mervyns locations when the California department chain was in bankruptcy.
The fast-fashion firm, which operates more than 450 stores, has been one of the few retailers to pursue a growth strategy through the recession. In addition to the Mervyns deal, it has built on its international business and widened the footprint of its new stores in the U.S. in order to land mall anchor spots.
Forever 21’s bid comes ahead of an auction Thursday of Gottschalks Inc.’s remaining properties.
Gottschalks entered bankruptcy after it was unable to put together new financing with Everbright Development Oversea Ltd., which had expressed an interest in the California-based chain, and El Corte Inglés, Spain’s largest department store retailer, which held a 15.1 percent stake in the store.