LOEHMANN’S SET TO FILE ITS REORGANIZATION PLAN
Byline: David Moin
NEW YORK — Loehmann’s is about to take a giant step toward getting out of bankruptcy. The Bronx-based off-pricer will file a plan of reorganization with the bankruptcy court in Delaware in a week, possibly by Wednesday, according to officials. Details of the plan were not available.
The company also said Thursday it plans to close 11 stores, bringing the chain down to 44 units and about $350 million in annual volume. Fourteen other stores have been closed since it went bankrupt in May 1999. When it operated 69 stores, the chain did about $450 million in volume.
“We are pleased with the progress that has been made in the company’s Chapter 11, and we are excited about its future,” Robert N. Friedman, chairman and chief executive officer, said in a statement Thursday.
Since the chain went bankrupt, there’s been a stream of speculation that Loehmann’s would be taken over by another company, or never make it out of bankruptcy. But during an interview Thursday, Friedman beat down those rumors, saying the company has been able to work with creditors to devise a plan to reorganize and emerge from bankruptcy as a stand-alone company. He also said the chain has recently been meeting its financial targets, based on a “conservative plan,” giving creditors more confidence that there’s a future for Loehmann’s.
However, even with a plan in advanced stages, the future is not guaranteed. The door is not entirely closed on other scenarios for getting the company out of bankruptcy, such as someone making an offer. In addition, the plan must still be approved by bankruptcy court and voted on by creditors. Friedman said if all goes well, he hopes the chain emerges from bankruptcy in June.
Loehmann’s fell victim to overexpansion in the Nineties, which was very costly and diluted the chain’s designer and brand offerings. Friedman acknowledged that Loehmann’s famous Back Room, where designer, bridge and social occasion styles are featured and consumers head to first in the store, lost some pizzazz in the past decade. But since the chain went bankrupt “we’ve really been emphasizing it again,” he said.
Friedman pointed out that Back Room currently represents about one-third of the apparel in the store, whereas pre-bankruptcy, it represented 23 percent.
Seven stores, in Westbury, N.Y.; North Atlanta, Ga.; Virginia Beach and Richmond, Va.; San Antonio, Tex.; St. Louis, and Brookfield, Wis., will close for good on Saturday. The other four, in Fullerton and Palm Springs, Calif.; Greenbrook, N.J., and Downer’s Grove, Ill., will remain open until around the beginning of June to liquidate merchandise from the other seven units, Friedman said.