Secaucus, NJ—Syms and its wholly owned subsidiary Filene’s Basement filed for Chapter 11 bankruptcy protection today, citing increased competition from other off price retailers and difficulties in obtaining brand-name apparel and accessories amid a difficult economy.
According to documents filed with the U.S. Bankruptcy Court for the District of Delaware, rather than reorganize, Syms and Filene’s Basement will begin liquidation and will close permanently in January 2012. The company asked the court to approve Cushman & Wakefield to assist in the sale of company-owned real estate, and Rothschild as its financial advisor.
“The filings today are the result of a process that has been taking place for several months,” Marcy Syms, chairman/ceo, said in a statement. “Our board has conducted a rigorous assessment of all the strategic options and alternatives available and after careful consideration has come to the conclusion that a bankruptcy filing and liquidation is the best way of maximizing value for all stakeholders.
Syms cited a litany of problems that retailer faces: “increased competition from large department stores that now offer the same brands as our stores at similar discounts; a proliferation of private label discount chains; a decline in buying opportunities as brand name labels have reduced overruns by improving their supply chain management.”
The liquidation of Filene’s Basement and Syms stores is expected to run through January 2012.
Shareholders Could See Some Recovery
In its second quarter report released in October, Syms reported its loss widened to $11.5 million, or 80 cents a share, compared with a loss of $10.9 million, or 76 cents, last year. Net sales fell to $86.3 million from $102.1 million in the second quarter 2010 while comparable store sales also slid 13%.
Since purchasing Filene’s Basement in 2009, Syms has been struggling and fired Rothschild earlier this year in the strategic review process, which might include sale of the company or its properties.
But Gary Binkoski, interim chief financial officer, told the court that the company’s brands were unable to reorganize on a stand-alone basis, concluding the “best way to maximize value … is a prompt and orderly wind-down of the retail businesses that will capitalize on the upcoming holiday shopping business.”
The company indicated that it expects some recovery for its shareholders after the bankruptcy. The company listed the book value of its assets as $236 million (about $97.7 million in real estate inventories, $65.8 million in merchandise) and liabilities of $94 million, as of September. Pension Benefit Guarantee Corporation is the company’s top creditor for an undisclosed amount. Phillips-Van Heusen Corp. is owed nearly $850,000.
Both retail brands have a long history in their respective markets. Founded by Sy Syms, in 1959, Syms was a pioneer in off-price retailing, expanding from mostly men’s wear into women’s etc. The company’s motto, “An Educated Consumer is Our Best Customer” became synonymous with the store and was continued when Marcy Syms took over the reigns from her father.
An offshoot of now defunct Boston-based department store, Filene’s, founded in 1909 by William Filene, Filene’s Basement was created soon after by his son, Edward, as a way to sell excess merchandise from his father’s store upstairs.
In recent years, Filene’s Basement became known for its annual “Running of the Brides” event where hundreds of would-be brides tear through racks of discounted wedding dresses. However, facing financial difficulties, the Basement filed for Chapter 11 bankruptcy in 2009.
Syms acquired assets of Filene’s Basement, Inc. at auction, after the Basement filed for bankruptcy for a second time in 2009.
Most the company’s stores–25 Syms doors and 21 Filene’s Basement stores—are located in theEastern United Statesand employ about 2,500, according to court documents.