Service Merchandise Moves to Close Operations
The company said that it would begin winding down operations Jan. 19 with going-out-of-business sales at its roughly 200 remaining retail stores nationwide. The stores will close, and 8,300 store employees will be laid off, when all assets are liquidated in the spring season.
About half of the 1,000 employees in the company's corporate, distribution and sales office will be laid off immediately. Remaining employees will be dismissed at staggered intervals through the year. All vendor orders will be canceled immediately.
The company said it planned to file a plan of liquidation by Sept. 30 and provide for the distribution of assets to creditors near the end of the year. The company plans to dispose of its real estate holdings, including about 70 properties it owns and 150 leases.
According to reports, attorneys for the company told a bankruptcy judge that Service Merchandise lost $180 million in 2000 and about $100 million in 2001 and had $1.34 billion in liabilities compared with $1 billion in assets as of November. Company officials said the combined punch from the Sept. 11 downturn and general downturn in consumer confidence and the economy doomed the retailer.
"While we wish the final result could have been otherwise, our foremost goal through the cases has been to maximize value for our stakeholders, and we are doing so with this course of action," said Sam Cusano, chairman/CEO of Service Merchandise, Nashville, TN.
Service Merchandise's first catalog showroom opened in 1960. The firm rose to prominence in the 1970s, when it was the nation's catalog-showroom retailer, achieving annual sales figures that topped $4 billion.
However, the company's offering lost appeal with consumers. After thriving into the 1980s, the rise of discount stores such as Wal-Mart began draining sales. An effort in 1998 to restructure the company's offerings to focus on jewelry and home items failed to restore Service Merchandise's vitality. The retailer filed for bankruptcy in March 1999, closed 130 stores and cut about 31,000 jobs.