Chiasso Files for Chapter 11; Plans Catalog, Online Focus
Direct marketer/retailer Chiasso, Chicago, filed for Chapter 11 bankruptcy protection this week, according to reports that say the company will shift its focus to being a catalog and online operation.Its stores have struggled since fourth-quarter 2001 when same-store sales fell 15 percent, and the company was slammed with another 15 percent sales decline in 2002 holiday sales, The Chicago Tribune reported.
The newspaper speculated that its "eclectic and quirky home accessories, many of them from European designers," could have been judged as sales that could be easily postponed by "increasingly frugal U.S. consumers." It also cited a drop in mall traffic after the Sept. 11, 2001, terrorist attacks and "the expense of a national retail store rollout that left the company vulnerable to an economic downturn."
Ten of the company's 14 stores will be eliminated, leaving its flagship Water Tower Place location in Chicago intact as well as locations in Boston; Troy, MI; and McLean, VA, according to ChicagoBusiness.com. Closings begin this week and are to be complete by the end of next month.
"We didn't file to liquidate," CEO David Marshall told the Chicago Tribune. "We intend to reorganize and come out as a stronger company."
ChicagoBusiness.com reported that Marshall said the company expects to emerge from Chapter 11 in six months "by focusing on its profitable Web site and catalog division, which account for almost half of the company's $15 million to $20 million in annual sales."
"The stores have struggled tremendously over the last 15 months," he told ChicagoBusiness.com. "We were sitting on high overhead in anticipation of rapid growth."
The company employs 157 part-time workers and 39 salaried employees, including 18 at its headquarters. About 20 salaried and 50 part-time employees will be eliminated.
