Filene’s Basement Seeks Bankruptcy Protection
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BOSTON — Filene’s Basement Corp., a discount clothing chain, filed for federal bankruptcy protection on Monday.
Separately, T. Eaton Co., Canada’s oldest department store chain, said on Monday that it applied for appointment of an interim receiver, as the death knell sounded for what was once one of the country’s leading retailers.
Eaton wants to buy time through the appointment of the interim receiver to allow discussions with an unidentified potential buyer.
Meanwhile, Filene’s Basement, headquartered in Wellesley, Mass., said its Chapter 11 filing was prompted by low inventory caused by vendors refusing to deliver merchandise.
The company said all of its stores will continue to operate pending the development of a reorganization plan.
Kurt Barnard, president of the newsletter Barnard’s Retail Trend Report in Upper Montclair, N.J., said the filing was not surprising, but part of the “gradual demise” of Filene’s Basement, once a haven for bargain hunters.
“They have lost their ability to compete on two fronts: for consumers and for merchandise,” said Barnard.
Filene’s Basement began years ago as an offshoot of Filene’s. The venerable Boston department store had pioneered the bargain basement idea, creating a local institution that drew shoppers by the thousands. There is no longer any corporate relationship between the two. Filene’s is owned by the St. Louis-based May Department Stores Co.
Filene’s Basement had previously tried to improve merchandising and operations and to enhance financial performance with measures that included laying off 15% of its headquarters staff.
It said it has secured a financing commitment for $135 million from General Electric Capital Corp. and Paragon Capital, subject to bankruptcy court approval.
Filene’s Basement has 51 locations in Massachusetts and 13 other states.
The company had announced a $6.4-million quarterly loss in May, and its stock has been sinking for the past year.
Trading in Filene’s Basement stock was halted at 91 cents on Nasdaq.
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