NEW YORK Department store chain Boscov's Inc filed for Chapter 11 bankruptcy protection on Monday and put itself up for sale, becoming the latest retailer to succumb as consumers reduce spending.
Founded in 1911, Boscov's describes itself as the largest family-owned, full-service U.S. department store chain, with 9,500 employees and 49 locations in Pennsylvania, Delaware, Maryland, New Jersey, New York and Virginia. The Reading, Pennsylvania, company plans to close 10 unprofitable stores.
Boscov's joins more than a dozen retailers to go bankrupt in the last year, including Bombay Co, Goody's Family Clothing Inc, Linens 'n Things Inc, Mervyn's LLC, Sharper Image Corp, Shoe Pavilion Inc and Steve & Barry's LLC.
Boscov's did not immediately return a call seeking comment on possible job cuts.
In a court filing, Executive Vice President Michael Hughes said Boscov's was hurt as the housing market collapse, skyrocketing energy and gas prices, and higher food costs caused consumers to spend less on discretionary items. He also said credit market conditions caused many vendors to tighten terms.
"The recent addition of these pressures and constraints to a broadline retailing industry that already operated on thin profit margins has forced the debtors into inadequate liquidity levels," Hughes said.
Hughes said the company sought court protection after failing to refinance its debt and locate new equity investors. He said it is exploring a possible sale to a third party.
Boscov's and seven affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. The company had $538 million of assets and $479 million of liabilities as of May 3, a court filing shows. The filing does not cover Boscov's Business Center and Boscov's Travel Center.
Boscov's said it had sales of $1.25 billion in the year ended February 2.
Hughes said Boscov's has had productive talks with creditors and intends to emerge from bankruptcy as soon as the first quarter of 2009.
The company plans to arrange up to $250 million of financing from lenders led by Bank of America NA to keep operating. It said it has also retained Lehman Brothers Inc to help it obtain new capital.
The company's largest unsecured creditors include Jones Apparel Group Inc, owed $3.1 million; Kellwood Co, owed $2.6 million, and an affiliate of VF Corp, owed $1.3 million, the bankruptcy petition shows.
(Editing by John Wallace)