Gottschalks Uncertain Future

[Mibrew]

Gottschalks faces uncertain future
By JONDI GUMZ - Sentinel staff writer
Posted: 01/06/2009 06:20:41 PM PST


Shoppers head into Gottschalks on Main Street in Watsonville on Tuesday. (Shmuel Thaler/Sentinel)Gottschalks, a 104-year-old retailer with locations in Capitola and Watsonville, is looking for credit sources to survive.

It's the second department store chain to be buffeted by the recession. Just a few days ago, Mervyns department store, burdened by debt and lagging sales, liquidated and closed all of its outlets, including its anchor in the Capitola Mall. Kohl's department store has taken Mervyns' space but hasn't set an opening date.

In early December, when Gottschalks reported a $10.1 million loss for the third quarter, company officials said they did not expect sales, cash and credit to meet their needs through the end of January "unless additional sources of financing are secured."

The 59-store chain had been negotiating with Everbright Development Overseas, a company based in China that owns hotel properties, for $30 million in exchange for a majority stake. After a due diligence period, an agreement between the two expired Dec. 15. Four days later, Gottschalks announced they were still talking.

There hasn't been any news since.

Greg Ambro, senior vice president and chief operating officer, did not return a call Tuesday seeking comment. Neither did Mary Jo Bullock, manager of Gottschalks on 41st Avenue in the Capitola Mall.

Gottschalks faces these troubling numbers:

n The $10.1 million loss was more than double the $4.1 million loss in the third quarter a year ago.

n The loss was due to in part to a goodwill


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impairment write-off of $7.5 million, indicating a drop in value.

n Stock that traded at close to $3 a share in April is trading at around 25 cents.

Gottschalks opened in the Capitola Mall on 41st Avenue in 1990, second in size to Sears. It opened in Watsonville in 1995, taking over a building vacated by Ford's department store at the corner of Main Street and West Beach Street.

Watsonville City Manager Carlos Palacios said he hadn't realized how troubled Gottschalks was, but he wasn't surprised given the demise of Mervyns. When he shopped there for Christmas, the store seemed to be doing well.

"It's a very important part of the downtown business, an anchor that attracts a lot of people downtown," he said, adding that losing the store would be a "big blow."

The store opened with 62 employees in a building rebuilt after the 1989 earthquake. Both building and land are owned by William Hansen, who runs an insurance business in Watsonville.

Gottschalks in the mall seemed busy during December.

"I waited in short lines at the cashier's counter," said Toni Castro of the Capitola-Soquel Chamber of Commerce.

Steep markdowns, like a $60 vest priced at $14, were part of the attraction.

If Gottschalks closed, Capitola City Councilman Dennis Norton said the mall location would be perfect for Target, a discount retailer that has a store in Watsonville and is proposing to open in Scotts Valley.

Gottschalks' troubles reflect problems experienced by retailers throughout the country, a shortage of customers willing and able to buy.

[kellieflan]

While I was reading this article, Gottschalks called to let me know that this Thursday is Tax Free Shopping!

My understanding from a friend who works at Gottschalks is that the one here in Oakhurst is a moneymaker. For whatever good that will do for a .25 cent stock.

[Yosemite Joy]

Well the one up here has very little competition. I just wish they would carry Levi's, Calvin Klein and DKNY jeans in SHORT!

[Mibrew]

I know they have Mens Levis, Ive bought them there, but your right... not much to shop for, mostly older styles, and their prices are not competative either, not a very good store compared to others, but at least we have one in Oakhurst ; }

[MtnBreeze]

When I was growing up in Fresno ..Gottschalks was one of the best places to shop. I even worked there when I got old enough but only for a short while....the one here is mediocre at best. I agree YJ on the selection.

[dorseygirl]

While I was reading this article, Gottschalks called to let me know that this Thursday is Tax Free Shopping!

My understanding from a friend who works at Gottschalks is that the one here in Oakhurst is a moneymaker. For whatever good that will do for a .25 cent stock.

I received an email from Gottschalks regarding the tax free shopping.

[monkey]

I like the Fresno Gottschalks, hate the Oakhurst one. It seems like they send all their crap t hat didn't sell elsewhere up to us. I shop there, but will only buy the deeply discounted stuff that is so cheap, I don't care will fall apart in a few washings. I also will buy Woolrich (when on sale) because the brand fits me well and is well made.

[BooBooBear]

Guess I better go use my gift cards up just in case!

[yosemitewriter]

I would love to see a Target take over where Gottschalks is. I have been in Gottschalks several times and most of the time walk out in digust, not buying anything. The two purchases I made over the years were both defective. The bath towels started shedding on first usage like a dog with the mange. They literally just fell apart. However, it was perfect for burying my dead cat. He didn't mind at all.
Then I bought a defective smoothie maker there, which was later (only a few weeks) replaced by another defective smoothie maker that died on the SECOND smoothie.
So I will shed no tears if that place goes belly-up.

[monkey]

They filed for Chapter 11 today. I stopped in yesterday and there are some AMAZING prices right now. I had to hunt for the good quality stuff, but it was well worth my time.

[Sandman]

It's really the only place in town that I can shop for clothes, so I am sad to see it go. Now I'll have to shop in Fresno or shop online.

I think it's too small for Target. I have a feeling it's gonna sit empty for a long time. :(

[Newcomer]

If they close it's gonna leave a big hole in that shopping area :( not to mention the unemployed that worked there.

[Red Mule]

I've said for some time that the more we shop in the valley, the more of our local businesses that will close. And, the more local jobs we will lose. Given a tougher economy, the worse it gets. Then the ONLY choice we will have is driving to the valley.

[monkey]

Chapter 11 is reorganization. Hopefully they will be able to pull out of the issues they have. I hate to think of MORE unemployment up here and the families it will effect.

[monkey]

I've said for some time that the more we shop in the valley, the more of our local businesses that will close. And, the more local jobs we will lose. Given a tougher economy, the worse it gets. Then the ONLY choice we will have is driving to the valley.


I completely agree, Red Mule, but sometimes it's hard to do. We need some cheap mini blinds for some windows in my office. I told my maintenance man to call the local places because I am a firm believer in shopping locally. He called True Value, In the Shade and American, all local businesses. The cheapest quote was over $100.00 each. He then checked his Home Depot catalog and they were between $25 and $30.

[Red Mule]

Monkey,

In your described situation, I would have to do the same. But, there are people that drive to shop at the Fresno Gotts, when we have one supporting local workers here. I know of people that drive to Fresno to save $5 while spending $20 on gas round trip, And so on...

Sure, if the price difference is dramatic enough or if an item is simply not available here, then we have no other options. But, we should at least try. It's in all of our best interests.

[only1alphafemale]

I remember when Gottshalks went through this same thing about 30 years back~ filing for Chapter 11. They recovered then and probably will this time too, however several stores did close, (like the outlet store they used to have upstairs at Manchester center and other smaller ones)

This was back when the main Gottshalks for the Fresno area, was in Fashion Fair Mall.

I havent shopped them regularly enough, in many years to know where they are located anymore~ ( finding better quality items, at other places for lesser prices~) Makes me wonder if the Oakhurst Store took the place of the "outlet" store that once existed in the Manchester Mall though~

[HIS_MOM]

only 1 i believe there is still a gottschalks in the manchester mall upstairs. well atleast there was a year ago.

[intheoak]

Although I would hate for any employees to become unemployed I cannot say I am sorry to see Gottshalks go if that is indeed what will happen...Being a "Big Girl" it has always been very very difficuly to find anything that works for me at Gottshalks. I did work their for a short time...the discount (25%) was the only thing that made it worth while to shop there. The quality of their clothes/products is not great, I saw that first hand with returned faulty items, and they do not have a good variety of clothes for women who don't wear a size 6.

[dorseygirl]

Although I would hate for any employees to become unemployed I cannot say I am sorry to see Gottshalks go if that is indeed what will happen...Being a "Big Girl" it has always been very very difficuly to find anything that works for me at Gottshalks. I did work their for a short time...the discount (25%) was the only thing that made it worth while to shop there. The quality of their clothes/products is not great, I saw that first hand with returned faulty items, and they do not have a good variety of clothes for women who don't wear a size 6.

You said from One bigger girl to another. There is just a small tiny area for my bigger size and then they are frumpy stuff, not the in stuff.

[dancingqueen]

Monkey, I have no idea what size windows you need blinds for but have you checked Saturday Market. They used to have a huge selection of blinds and they were cheap too, not sure what they have left.

[CatdaBrat]

If the local Gottschalks store fills the needs of most other mountain area residents, then that's too bad if it closes. But as for myself, every trip there to find clothing for myself has ended in frustration. As noted before, there were lots of clothes for the "skinny-minnie" or the teen gals, but for adult women, most everything had that "frumpy" old look, also noted before. There were very, very few XL and almost never any "plus" sizes.

What was available looked like something I call "rest home" attire. And as far as the sales go, sometimes I did find a bargain here or there, but most of the stuff was just really cheap junk and "seconds" trucked in special for the sale. It was odd stuff, with most garments on the racks being "one of a kind," not referring to originality of design, but just one dress or shirt and no other sizes to choose from. Sometimes they were even ripped or dirty.

I don't know about now, because I won't go in there unless I am desperate, but I couldn't even buy pantyhose in there! I had to go to Raley's to get them.

I want to shop locally for clothing, but it would be nice if those of us who are not skeletal had something to go in and buy! Something that doesn't make us look like we are 106 years old!

[dancingqueen]

When I was able to find something cute there, I saw myself coming and going all over town. Seems like everyone had the same outfit on.

[CatdaBrat]

When I was able to find something cute there, I saw myself coming and going all over town. Seems like everyone had the same outfit on.

Yes, that happened to me, too! Every time I did manage to find something, that same article of clothing was everywhere!

[concerned1]

That's when you compliment the wearer for her awesome outfit... and smile... you gotta smile!!!

[jakobscalpel]

Damn, there go the two shares of Gottschalks stock I was given by a family friend back when I graduated from high school!

No one wants to lose stores in an area but this is going to happen everywhere. Parts of Fresno will be a commercial store graveyard within the next two years. Unfortunately when it happens in Oakhurst the loss isn't as distributed as a loss in Fresno and it feels worse.

[rimar]

Gottschalks Files for Bankruptcy


Posted Wednesday, January 14, 2009; 15:16 PM


The company plans on operating as usual with debtor-in-possession financing


by James Olinger


Fresno, CA - Fresno-based department store chain Gottschalks has filed for Chapter 11 bankruptcy protection after a lengthy sales slump.

The company is determined to continue operating normally. In order to do this, it has negotiated a $125 million debtor-in-possession financing from a group of lenders that includes GE Capital. Gottschalks plans on using this to fund employee wages and benefits, certain vendor payments and other expenses while it reorganizes.

Other options being discussed include a sale of the company or a dealing with a third-party investor.

“We expect to proceed quickly and hopefully partner with a new owner that will continue to offer branded high quality merchandise and the special service that we have always provided to our customers,” said Jim Famalette, chairman and CEO of Gottschalks, in a release.

Some of the latest bad news for the 104-year-old company came last month when it was announced that the same store sales for the month of December had decreased 9.6 percent from the same time the year before.

Gottschalks operates 58 department stores in several states, including 38 in California.

[Red Mule]

I don't like the jean/levis/pant selection they have, but I discovered Pant's and Things. Gotts does have other things I might want. And, they provide employment for people that might shop at other locals stores that I REALLY don't want to see fail.

We just need to try harder to keep money circulating up here. Everything is interconnected in the local economy.

[Iris]

Gottschalks Chooses Liquidators as Preferred Buyer
Friday, Mar. 06, 2009
By Tim Sheehan / The Fresno Bee

Gottschalks Inc. has chosen a group of companies that specialize in liquidation to buy its assets when the bankrupt company prepares to sell itself at auction at the end of this month.

If the deal goes through, remaining inventory at the Fresno-based retailer's stores could be sold and the stores closed by July 15.

In documents filed with the U.S. Bankruptcy Court in Delaware, the Fresno-based retail chain revealed a consortium of capital funds as the potential buyer that would conduct a going-out-of-business sale of Gottschalks' merchandise, fixtures and equipment.

The consortium includes SB Capital Group LLC of New York; Tiger Capital Group LLC of Boston; Great American Group LLC of Los Angeles; and Hudson Capital Partners LLC, based in Massachusetts. Each of the companies is involved in liquidations and other "asset disposition" operations, according to Web sites for the firms.

If no better bids surface at the March 30 auction, court documents indicate the liquidation sales at each of Gottschalks' stores would commence as soon as the bankruptcy judge approves the purchase. A court hearing on the auction results is now scheduled for April 1.

Gottschalks, founded in Fresno in 1904, operates 58 department stores and three specialty stores in six western states, the majority of them in California.

[CatdaBrat]

I TRY to shop at the local Gottschalks, but if I need clothing for myself, most of what I see looks like stuff you'd see on residents of a convalescent home. They have pretty good things like purses, wallets, perfumes and a few housewares, but as far as clothing for adult women goes, no thanks! It's ugly.

[rimar]

River Park's store has really good stuff ... I will hit their final sales ...

[BooBooBear]

Can't say I'll miss it. I had some gift cards someone gave me and I went to use them. Couldn't find a thing I liked and the thought of paying over $100 for a stupid purse was unfathomable!! Some that I saw were almost $200...are you kidding me??? I can't believe people spend that kind of money on a Purse! I'm sure glad I don't feel the need to make myself look more important than I am and I apparently have no need to be that wasteful with my hard earned money.

After an hour of wandering around trying to find "something" I ended up with a little jewelry box that I can put my rings in. Shoes were ugly, clothes were ugly...and everything in my opinon was WAY over priced.

[Mibrew]

The Mens clothes are also out dated, but they still have Levis ; )

[Dodgergirl]

Effort to lease Gottschalks sites another dire sign

In another sign that Gottschalks Inc. is possibly headed toward liquidation, the Fresno retailer is trying to market its individual store locations.

Unloading store sites is often a signal that a retailer is preparing to go out of business.

Although Gottschalks still could survive, the company's real estate consultant, DJM Realty, has released a brochure offering the company's 69 retail locations in six states, including four in greater Sacramento. Most of the sites are leased; a few are owned by Gottschalks.

Gottschalks is operating under Chapter 11 of the bankruptcy code and faces a do-or-die auction for its assets March 30. The DJM brochure notes Gottschalks could be sold as a "going concern," which means the company stays open and the individual leases are pulled back off the market.

But real estate experts say the DJM effort shows the increasing likelihood that Gottschalks will be liquidated.

"It's just another dark sign -- a very unfortunate dark sign," said Garrick Brown of Colliers International real estate in Sacramento. Colliers isn't involved in the Gottschalks matter.

A consortium of liquidators has been designated as lead bidder, or "stalking horse," in the March 30 auction. Under the rules, anyone outbidding the liquidators would have to pay them a breakup fee of nearly $1 million. That gives the liquidators a leg up on anyone else.

Last week Bloomberg business news reported that three firms have expressed interest in bidding to keep Gottschalks open. They include El Corte Ingles, a Spanish retailer that owns 16% of Gottschalks' stock.

Gottschalks officials couldn't be immediately reached for comment today.

Monday, Mar. 23, 2009
By Dale Kasler / The Sacramento Bee

[only1alphafemale]

I went and checked the local (California) listings, and the one at the Sierra Vista Mall in Fresno/Clovis is listed, along with 2 in Modesto, and yes, ours here in Oakhurst is also listed.

There were 71 listings total, (a few of these were Circuit City and Office depot), but the majority of the total 71 listings were for Gottshchalks.

http://www.djmasset.com/Listings/propertyInquiry.asp?sid=SP

[monkey]

I went to Gottschalks today to see if they had sheets on sale. I've decided to treat myself to a high thread count sheet. So, I find some 700 thread count on sale for $72.00. I pick them up and take them to the cashier in that department. She is chatting with a friend and didn't even acknowledge me.
So, after a few minutes I go to the main chashier in the middle of the store. The line is forever, so I walk to the make up dept where there are 4 sales women standing around talking.
I asked them if they were able to ring up purchases and one of the says, "Sure" and I go to her register where she scans the sheets and it rings up $89. I told her they are on sale for $72 and she told me $89 was the sale price. I said, "Well let me go double check" and she tells me that if the price is $72, to go to the door at the back of the store where they do gift wrapping. So I go back to the sheet dept., see that I am correct on the price and take the sale paper that lists the price off of the display and take it to the gift wrapping dept.
She scans it and tells me that the price is $89. I showed her the display price and she tells me she can't do anything and to take it back up front to the register.
So, I go BACK to the makeup lady, show her the display price and tell her that the lady in the back can't help me.
She looks at the display price and tells me that it is ringing up as $89. and I said, "So you are telling me you won't honor the price you have listed?" and she turns and picks up the phone to call someone about the price.
At that point I told her that the sale price was not worth all the frustration and that I was not going to purchase the sheets anymore. She apologized and I told her that it was not her fault and walked out the store.
Is it any wonder why they are going under? Hopefully a company with professionalism will take over.
I left the store, went to El Cid's, had lunch and a Margarita and feel much better now.
I'm going to Fresno on Thurs and will find good sheets there. So much for buying local today.

[dorseygirl]

I have a friend that does the Clinque sales at the Gottschalks here and a couple of stores in Fresno, she is going to Southern CA tonight to find out about her fate.

[monkey]

dorseygirl, I don't know if it was your friend or not, but I don't want you to think I'm saying woman at the make up counter was rude or wrong in any way, I'm sure she was following procedure, but the procedure sucks. They had me walking all over the store just to pay for an item. I hope your friend has good news.

[only1alphafemale]

I was under the impression that they had to honor the advertised price especially since its posted IN the store and not a sales add error~ and sell it to you for that?

I guess if they flat refuse there isnt much recourse or action you can take inside of the store short of asking for a manager..... Long term? Well what the heck? They are going out of business anyway, so I'm sure the thought of "who cares" is in the backs of their minds.

[monkey]

They didn't refuse to give me the price, but it was getting to be such a hassle to get it approved, I got frustrated and left. I'm sure if I had toughed it out, I would have gotten the price eventually, but it wasn't worth my time and efforts. I'll find a company that is happy to take my cash.

[Dodgergirl]

I worked in the housewares department for the Christmas season one year... They had us stay forever after closing to change those pesky signs...two or three times a week... If we forgot one the dept. manager told us to honor the price, then make sure the sign was removed... Don't know what's up with them now, other than they've gotten more lazy. (At the Christmas Party I was given the Most Motivated Award) 'cause although I don't usually work in customer service I had a blast helping people find whatever it was they were looking for...

[only1alphafemale]

They didn't refuse to give me the price, but it was getting to be such a hassle to get it approved, I got frustrated and left. I'm sure if I had toughed it out, I would have gotten the price eventually, but it wasn't worth my time and efforts. I'll find a company that is happy to take my cash.

I understand that Monkey. ~ I was referring to when you brought the posted price up to them and showed it to them, then they should have sold it to you right then and there without any further wasting of time or hassle. (Thats the way it should have been handled to my way of thinking) :)

[BooBooBear]

You are way more patient than I am!! I would have asked to see a supervisor!!

[dorseygirl]

dorseygirl, I don't know if it was your friend or not, but I don't want you to think I'm saying woman at the make up counter was rude or wrong in any way, I'm sure she was following procedure, but the procedure sucks. They had me walking all over the store just to pay for an item. I hope your friend has good news.

I totally understand - I would have done the same thing.

[only1alphafemale]

China one of 3 Gottschalks bids
Government firm aims to keep business running, Fresno retailer reports.
Thursday, Mar. 26, 2009
By Tim Sheehan / The Fresno Bee



Gottschalks Inc. said Thursday it has three bids for the department-store chain -- including one from a government-controlled retail conglomerate in China that hopes to keep the business running.

Shandong Commercial Group General Corp., one of China's largest retail companies, was named along with the other two bidders in a filing Thursday with the U.S. District Bankruptcy Court in Delaware. It is the only suitor proposing to buy Gottschalks -- which filed for bankruptcy protection in mid-January -- as a "going concern."

The other two bids are from companies that would dispose of the merchandise through going-out-of-business sales and close the stores.


Details of the Shandong proposal -- such as how many stores it would keep open -- were not disclosed Thursday.

Gottschalks chairman and chief executive James Famalette was in meetings throughout the day Thursday -- including an after-hours conference with Shandong representatives at the company's north Fresno headquarters -- and was unavailable to comment.

An auction for Gottschalks' assets will be Monday in Delaware. A judge will be asked next Wednesday to approve the prevailing bid from the auction.

Gottschalks, founded in Fresno in 1904, operates 58 department stores and three specialty stores. The majority are in California, but other stores are scattered throughout Alaska, Idaho, Nevada, Oregon and Washington. The company employs about 5,200 people.

Many in Fresno worried about the company's future Thursday.

Shareholders, who stand to lose their investment if the company goes out of business, say they hope the chain can stay open in one form or another.

"If the liquidators get it, then it could be all gone," said Nick Notarnicola of Exeter. "And that would create a big hole in the community. It is not just the loss of store, it's the loss of jobs."

Notarnicola shops at the Visalia store and owns 200 shares of Gottschalks stock.

Investor Mary Jane Barbian of Fresno has remained loyal to her local retailer despite its financial troubles. She shopped at the Fresno Fashion Fair store recently.

"I was just in there, and it was very sad," Barbian said. "And while I would rather the family or someone local keep it open, this Chinese company may be the next best thing."

Shandong operates about 100 stores, including supermarkets and "hypermarkets" in China, according to a May 2008 report by the Li & Fung Research Centre in Hong Kong. Its 2007 sales of about $2.1 billion ranked it among the top 20 retail companies in the world's most populous nation.

Its other businesses include a brewery, a luxury hotel and a major shopping center in its home province of Shandong.

Joseph Penbera, a member of Gottschalks' board of directors, said Shandong was a late entry into the bidding for the company. "This has just been kind of over the transom," Penbera said. "It was really recent."

Penbera expressed relief that at least one bidder wants to keep Gottschalks going. "My concern has been about the jobs," said Penbera. "To see a company with all these people just 'whoosh' right out of the area would be really bad."

In addition to Shandong, two others are bidding for Gottschalks.

One is a consortium of four liquidation firms that Gottschalks named earlier this month as the "stalking horse" -- or standby -- bidder. The same group of four companies also conducted liquidation sales for the bankrupt chains Mervyns and Circuit City, among others.

The final bidder -- a joint venture of real estate and liquidation companies -- also proposes to sell of the assets and shut down Gottschalks.

Gottschalks must now weigh which offer will best allow the company to satisfy its creditors, although the company has some discretion to favor a bidder that would keep the business running.

The standby bidder, however, has an edge going into Monday's auction. If another bidder beats its price, it must pay a "breakup fee" of $750,000 for a going-concern bid or $995,000 for a liquidation. Any liquidator must also beat the stalking horse bid by at least $200,000.

Carlos Fajardo, shopping Thursday at the company's Manchester Center store, said it doesn't matter who owns Gottschalks -- as long as the company survives.

"Whatever company buys Gottschalks, at least it would employ the Fresno population," he said.

"As long as they employ the Fresno population and it's run in an American way ... anything to help Fresno."

http://www.fresnobee.com/local/story/1289526.html

[BooBooBear]

Sad to say I never shop in Gottschalk...not my kind of store and so I can't say that I'll miss it at all. I remember when I first moved up here I remember there was a Sprouce...I liked that store.

[Dodgergirl]

Gottschalks up for auction today
Two liquidators, a Chinese company can make bids.

Gottschalks Inc. goes on the auction block today in Delaware, with three bidders vying for the company's assets -- and the retailer's fate as a going concern hanging in the balance.

The auction will begin at 7 a.m. Pacific time behind closed doors at the offices of Gottschalks' bankruptcy attorneys in Wilmington.

The Fresno-based company, which operates 58 department stores and three specialty stores in six Western states, filed for bankruptcy in mid-January and is selling itself to satisfy creditors.

According to Gottschalks Chairman and Chief Executive James Famalette, the companies are not required to disclose the substance of their bids until today. In order to qualify for the auction, however, "they must show the financial capability to be a bidder and be able to place a deposit," he said.

It is unlikely that the results of the auction will be made public until Wednesday, when a bankruptcy judge will be asked to approve the winning bid.

"No bidder is fully committed until [the] court approves their actual bid next Wednesday," Famalette said.

Of the three proposals received by Gottschalks last week, only one -- from China's Shandong Commercial Group -- involves keeping the company going in some form.

Shandong, which according to Asian business reports is owned by the government of Shandong province, has business interests that make it one of the top 20 retailers in China.

The other two bids come from liquidation firms that would sell off Gottschalks' merchandise, fixtures and equipment in going-out-of-business sales and close the stores by mid-July. A separate auction to dispose of Gottschalks real estate -- 63 retail leases and six properties that it owns -- would be held later.

[Iris]

No Word Yet on Gottschalks Auction Fate
Monday, Mar. 30, 2009
By Tim Sheehan / The Fresno Bee

4:45 p.m.: An attorney for one of Gottschalks’ Fresno landlords, River Park Properties, learned from colleagues in Delaware that bidding was “still going strong” late today.

“There must be some overbidding going on,” said Michael Wilhelm, a Fresno attorney. Wilhelm said the auction began at 7 a.m. (PDT), but by 4 p.m. he'd heard no report of an outcome. "We’re holding our breath to see what happens."

The results of the auction, held behind closed doors, may not be known until Wednesday morning, when a bankruptcy judge will hold a hearing to approve the prevailing bid.

But Gottschalks’ landlords were to be notified of the winning bid within hours after the auction’s conclusion so they can file objections with the bankruptcy court by Tuesday afternoon.

4:04 p.m.: An auction for the bankrupt Gottschalks department-store chain, scheduled to begin this morning in Wilmington, Del., has yet to yield any word of a winner.

The auction, held behind closed doors at the offices of Gottschalks' bankruptcy attorneys, was expected to include three bidders vying for the Fresno-based chain's assets. Two of the expected bids are from companies with designs on selling Gottschalks' inventory, fixtures and equipment in going-out-of-business sales. The third, from the government-controlled Shandong Commercial Group of China, reportedly was to keep the company in business as a going concern.

The results of the acution may not be made public until Wednesday morning, when a bankruptcy judge in Delaware is expected to hold a hearing to approve the prevailing bid.

Such auctions can become drawn-out affairs, as was the case with Sacramento-based Tower Records. That bankruptcy auction in October 2006 attracted 16 bidders and stretched over two days before a liquidation company served up the winning bid.

Gottschalks filed for bankruptcy in mid-January. The company, which operates 58 department stores in six western states, employs about 5,200 people.

If one of the liquidation bids wins, store-closing sales could begin as soon as later this week.

Details of the Shandong proposal — including whether any Gottschalks stores would be closed or what changes might be forthcoming — have not yet been made public.

Shandong’s holdings make it one of the top 20 retail companies in China. Information provided by Gottschalks to the bankruptcy court indicates Shandong’s Yinzuo Group reported total sales of about $1.8 billion in 2007. It operates 57 “Silver Plaza” department stores in the Shandong and Hebei provinces and also has 106 supermarkets and convenience stores.

A promotional video produced by Shandong Commercial reports the Yinzuo Group employs more than 70,000 people.

Shandong's other enterprises include auto dealerships and shopping centers; pharmaceutical research and manufacturing; commercial real estate development; luxury hotels and entertainment; colleges and trade schools; mining, investments, beer brewing and food production; and mass media.
http://www.fresnobee.com/updates/story/1295996.html

[Iris]

Gottschalks Will Close; Liquidator Wins Bid
CEO announces end of century-old retailer
Tuesday, Mar. 31, 2009
By Tim Sheehan The Fresno Bee

Liquidators won the battle for Gottschalks Inc. on Monday and will shut down the company, CEO James Famalette said late Monday.

“It’s very difficult to talk right now,” said Famalette, his voice shaking, a little more than an hour after the auction ended in Delaware.

He said Gottschalks would begin notifying employees today about what will happen. Going-out-of-business sales could begin as early as this week.

Going-out-of-business sales could begin as early as this week for Gottschalks, which on Monday was sold to a liquidator. The Fresno-based retail chain has about 5,200 employees.

Gottschalks, founded in Fresno in 1904, operates 58 department stores and three specialty stores. It has about 5,200 employees in California, Oregon, Washington, Alaska, Idaho and Nevada.

The liquidators were one of three bidders, including another liquidator and a Chinese company, Shandong Commercial Group, that intended to keep some of the stores open.

“We tried as hard as we could to make this work with the Shandong people, but there were too many things financially, with the size of the deal, and regulatory issues, that they just couldn’t get done in time,” Famalette said from Delaware.

Famalette said that while Gottschalks’ merchandise and other assets will be liquidated, he hopes to continue negotiations with Shandong for a post-liquidation revival of Gottschalks in some form. He was unable to discuss details of those talks Monday night.

Famalette said the group chosen by the company earlier this month to make the opening bid was the winner Monday. That consortium of liquidators includes SB Capital Group of New York, Tiger Capital Group of Boston, Great American Group of Los Angeles and Hudson Capital Partners of Massachusetts.

The same four companies also conducted the going-out-of-business sales for bankrupt retailers Mervyns and Circuit City, and were joined by two other asset-disposition companies in the liquidation of Linens N Things.

Famalette said the auction, which began at 10 a.m. Monday, was not concluded until 11 p.m. Eastern time.

The auction was held behind closed doors, and the results have not been officially announced by the bankruptcy court.

The prevailing bid is due to be approved at a court hearing Wednesday by U.S. District Bankruptcy Court Judge Kevin Carey in Wilmington, Del.

Once the order is signed, going-out-of-business sales at Gottschalks stores could start the next day — perhaps as early as late this week.

Also on Wednesday, an auction date is expected to be set to deal with Gottschalks’ real-estate assets: its leases and the store sites it owns.

Gottschalks filed for Chapter 11 bankruptcy in mid-January in hopes of either reorganizing its debt or finding a buyer.

The company released a statement Monday night. In it, Famalette said: “Regrettably, liquidation is now the only path for our company. We are deeply disappointed with this outcome and the impact it will have on our employees, customers, business partners and the communities we have served for 105 years.”

The original liquidation agreement Gottschalks had with the winning consortium indicated that current Gottschalks store employees may be kept on for the closing sales.

The liquidators must identify which employees it wishes to keep before the sale begins. Those employees will remain on Gottschalks’ payroll, but liquidators may “stop using any retained employees at any time during the sale” if they give Gottschalks a seven-day notice, according to the agreement. It will be up to Gottschalks to terminate any employees that aren’t needed for the liquidation.

Some employees who stay with the stores for the liquidation sales may receive retention bonuses of up to 10% of their base pay, according to the agreement.

Liquidation sales are expected to be concluded by July 15.
http://www.fresnobee.com/170/story/1296310.html

[Iris]

So sad for the employees who are losing their jobs, and the communities that are losing businesses... :no:

[rimar]

I stopped in friday and prices were higher then I have ever seen them there. Local new stations confirmed that the liquidators have actually raised prices.

[Slewfoot]

I also stopped in Friday though I swore I'd never shop there again. Signs eveywhere advertising going out of business. Everything was 10 to 20% off, some as much as 30% off. What a joke, in the past they had large racks of 50% off but Friday I could only find a couple of small ones. I have found that that this store has had mostly what I consider factory rejects and sold them at regular prices. I think I'll even pass on their 'drasticly reduced prices' in the end. I for one will be glad to see them go except for those people who will lose their jobs.

[monkey]

Yesterday I saw a few people standing on street corners in Oakhurst with bright signs saying that Gottschalks was having a going out of business sale. I don't like the tactics of this liquidator. It will be interesting to see how the whole transition goes.

[Iris]

As Rima stated in a earlier post, it was confirmed by the media.
I saw a segment on the news several days ago that indicated that this is the "norm" when liquidators come in. It said that the best values are to be had during the last couple of days of the liquidations sale, but by then supplies have been depleted. :confused:

[dancingqueen]

I think that they are moving some of the major brand small appliances out of the store, not sure where to. A friend of mine who knows that I need a knows that I have been looking for a new coffee maker and that they had boxes and boxes of very good brands on the shelf 2 weeks ago checked it out for me. She said on Friday there was not one left on the shelf. This is not Gottschalks that is doing this, removing all of those 50 and 60% racks, it is the liquidaters. I don't plan on setting foot into the store until the last week, there may not be a thing left, but so be it, I will take the chance. I sure don't want anything at the prices that they are right now. I too feel very badly for everyone who is now out of a job.

[BooBooBear]

DITTO: "I think I'll even pass on their 'drasticly reduced prices' in the end. I for one will be glad to see them go except for those people who will lose their jobs".

I never shopped there and I've never liked that store period. I'm not going to miss it at all.

As for the prices being higher and the discounts being puny well, the Liquidator needs to make back the money they spent for the priveledge of buying it so why would they put things on discount right away, why wouldn't they raise the prices to then put a discount on them. They think by putting the world Going out of Business and Sale out there it's going to draw in the crowds to help them make back their money and for the most part there are people out there that can't resist the word SALE and will buy buy buy whether or not they need the items they are buying!

[only1alphafemale]

I have actually known people who's eyes quite literally *glazed over* when they saw a SALE sign...... :rofl:

[BooBooBear]

I have actually known people who's eyes quite literally *glazed over* when they saw a SALE sign...... :rofl:

LOL...me too!! I think that's totally ridiculous but to each their own rolleyes:

[only1alphafemale]

I havent been inside of a Gottshalks down in the valley in years, but from what I remember, and what this store up here sold? I really do believe they were using this store up here for the seconds and rejected merchandise and over stocks........

[amazing_lady]

No, I didn't mispell the two, we have an unusual situation at our local mall where Gottshalks bought out a Harris store and had a location on each end of our mall! They put mens, furniture, household goods, etc. in one and women's and childrens in the other. I've only shopped there about half a dozen times in the 15 years they've been at our mall, and, now, both of them closing. They never really had anything I was interested in, and their prices weren't always a bargain. Our mall lost Mervyn's several months back, now both the GS, and I think Dillards, or is about to, so it is a dismal place to be! I've learned when Circuit Ciy and Linnen's and Things went out of business around the holidays that their 60% off sales were a bunch of hooey! They raised prices before the sales, and Heaven help you if you bought anything that was defective!!! So sad, too bad!!!

[CatdaBrat]

I havent been inside of a Gottshalks down in the valley in years, but from what I remember, and what this store up here sold? I really do believe they were using this store up here for the seconds and rejected merchandise and over stocks........

Those truckloads of junk they shipped up here for their big sales had to be seconds. Most of the stuff was just one-of-a-kind (not in a good way) and was often soiled or seams were mismatched, buttons missing, threads loose, etc. I'm not saying you couldn't find useful stuff if you looked for it, but most of it looked pretty sorry. I saw a few tops I liked on those sale racks, but they were only in "Anorexic" size!

[Summer]

DITTO: "I think I'll even pass on their 'drasticly reduced prices' in the end. I for one will be glad to see them go except for those people who will lose their jobs".

I never shopped there and I've never liked that store period. I'm not going to miss it at all.

As for the prices being higher and the discounts being puny well, the Liquidator needs to make back the money they spent for the priveledge of buying it so why would they put things on discount right away, why wouldn't they raise the prices to then put a discount on them. They think by putting the world Going out of Business and Sale out there it's going to draw in the crowds to help them make back their money and for the most part there are people out there that can't resist the word SALE and will buy buy buy whether or not they need the items they are buying!

I agree with every word you just posted Boo Boo.

[monkey]

I stopped in today, curious how much the sheets that I was looking at were "on sale" for now. Last time I looked, they had been on sale for $89, and marked down to $72. Today they were on sale for $112. I almost pooped!

[CatdaBrat]

I probably won't go in, sales or not. I am trying to get RID of stuff, not get more. I have so much clutter it isn't funny.