Last Updated Aug 4, 2008 7:36 PM EDT
Boscov's will lay off 1,400 employees and immediately close 10 stores, the company said. Seven of the 10 were former Strawbridge's, Hecht's, and Kaufmann's stores that Macy's sold to Boscov's in 2006, when Macy's took over Federated Department Stores.
The New York Post reported in July that Boscov's had been cut off by half its suppliers after it struggled to make the 10 new stores profitable.
In the filing, Boscov's reported sales of $1.25 billion. It will continue operations with a $250 million credit line led by Bank of America.
"It's the perfect storm," Chairman and CEO Kenneth Lakin told the Baltimore Sun. "We tried to take advantage of an opportunity that we saw at the time. Nobody could have predicted that the liquidity and banking issues would have occurred like they did."
But retail consultant Mark Millman said Boscov's overreached and made poor deals in underperforming malls. "They took a lot of real estate and some of it wasn't prime at all," Millman told the Sun.
Boscov's is a little different from the over-leveraged national chains that have gone into bankruptcy this year. Based in Reading, Pa., it operates 49 stores in six Midatlantic states. They're department stores of a kind most of us haven't seen in a while, with appliances, toys, sporting goods, candy, greeting cards, and electronics for sale along with apparel and home furnishings.
The Boscov and Lakin families have owned the company since Solomon Boscov peddled goods door-to-door in Western Pennsylvania 97 years ago. In recent months, family members put $28 million into the chain to forestall bankruptcy, according to published reports.
"The middle-American consumer is hurting, so we are hurting," Lakin told the Pittsburgh Tribune-Review.