From Staff and Wire Reports
Discount clothing chain Goody’s Family Clothing will begin liquidating its stores, including a store in Dalton, on Friday as the retailer becomes one of the year’s first victims of the worsening economy.
The move, which comes less than four months after the privately held retailer emerged from Chapter 11 bankruptcy protection, affects the Knoxville, Tenn.-based chain’s 287 stores scattered throughout 20 Midwestern and Southern states, said Cathy Hershcopf, a partner at Cooley Godward Kronish LLP. Goody’s has a store at Walnut Square Mall in Dalton and nearby stores in Calhoun and Fort Oglethorpe.
A local store official referred questions to Goody’s corporate office. A phone call there Wednesday afternoon resulted in an after hours message.
The firm is working with Goody’s vendors and its parent, PGDYS Lending LLC. It’s uncertain what will happen to the company’s 9,800 workers after the liquidation — being handled by a joint venture between Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC — is completed by the end of March. But without a last minute buyer or an investor to purchase high-performing stores, their job outlook is grim.
“Any loss of commerce is a concern,” said Brian Anderson, president and CEO of the Dalton-Whitfield Chamber of Commerce. “This isn’t necessarily unexpected. Not just Goody’s, but all of the national news and regional news is that there will be continued fallout in the retail category. They’ve had some concerns over the last couple of years even before the current slowdown. This is just more evidence that the retail sector is going to be as hard hit as anybody.”
Anderson said the area, which has seen unemployment reach 10.4 percent, “can’t afford any loss of jobs.”
“People will still do some shopping,” he said. “The question would be does it migrate to a different outlet in the community. One of our concerns is retail leakage” outside the community.
Anderson said the Dalton-Whitfield Joint Development Authority is developing tax incentives for retail expansion and new retail.
“Short term, we are all in this concern cycle in that we don’t know what’s going to come next,” he said.
Hershcopf said lack of consumer confidence has been a problem.
“I think every retailer experienced a great deal of pressure this holiday season because of the lack of consumer confidence,” Hershcopf said. “But undercapitalized companies like Goody’s experienced more pressure from their lenders and from their vendors.”
Goody’s filed for bankruptcy protection in June, saying at the time the move would help it address “pressures from tightening credit markets, strain on merchandise flow and a sizable but isolated number of underperforming stores in the chain.”
As part of its reorganization plan, the company closed and liquidated dozens of underperforming stores, including three in Chattanooga, shuttered a distribution center in Arkansas and a corporate office in New York. It also cut operating and corporate costs, ended its e-commerce business and an associated distribution center in Tennessee.
But that proved to be inadequate as shoppers tightened their belts amid the ongoing recession, causing a downright dismal holiday shopping period for retailers that usually bank on the Christmas spending to boost profits.
The 59-year-old retailer has now sought bankruptcy protection for a second time and executives with the company are speaking with competitors about whether they would like to purchase some of the chain’s stores.
Goody’s is owned by PGDYS Lending, which is managed by Prentice Capital Management.
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