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Mervyns collapses in retail slump

Another chain fails, along with Linens 'n Things and Shoe Pavilion. For shoppers, that means bargains.

October 18, 2008|David Pierson and Tiffany Hsu | Times Staff Writers

After 59 years in business, the Mervyns department-store chain called it quits Friday -- promising a huge going-out-of-business sale just in time for the holidays.

And there is plenty of competition for a close-out Christmas. Linens 'n Things Inc. began a liquidation sale Friday, and Shoe Pavilion Inc. starts one this weekend, according to firms that said they were hired to liquidate the stores.

Already gone are the novelty retailer Sharper Image Corp., Wickes Furniture and Levitz Furniture, and retail experts say more closings loom.

"This is unprecedented, really, the number of stores that are going to be closing," said Daniel Kane, principal of Tiger Capital Group, one of several firms hired to liquidate Linens 'n Things and Shoe Pavilion. "There's going to be a tremendous amount of bargains out there."

As the economy's decline continues to batter Main Street, shopping centers and strip malls across the nation are becoming home to empty storefronts among the holiday decorations. On Wednesday, the government announced that retail sales had slumped the most in three years.

What are seen as frightening developments for retailers could prove a blessing for shoppers as the gift-giving season approaches. Bargains galore duel with a sense of loss for many old favorite stores.

Some shoppers Friday were looking for deals at the Mervyns in the Glendale Galleria, where sale signs blanketed the racks and tables.

Joann Mendez said she was taken aback by all the discounts, such as half price for KitchenAid spatulas, spoons and other utensils or the 75% off Pierre Cardin men's shirts.

The 34-year-old Sun Valley resident said it was a wonder Mervyns hadn't closed earlier.

"I'm not surprised, considering how the economy is," Mendez said. "But it's too bad, since the store's been around so long."

She then looked at the purse and blouse she had picked up and pondered some liquidation calculus: Should she come back another day when the prices might drop further? Or would the item be gone for good?

Meanwhile, sale signs were plastered across a Linens 'n Things in Burbank. They caught the attention of Julie Alcantar from across the street. Not long after, she exited the store with two cartloads of purchases totaling $800.

"This was a bonus, a pleasant surprise," said Alcantar, 47, of Sun Valley.

The shuttering of Mervyns represents another blow to Southern California's long-declining department-store scene.

Over the last four decades, many of the names that anchored shopping malls and fashionable boulevards have faded -- May Co., Robinson's, Bullock's, Broadway, Buffum's, I. Magnin -- as chains merged and consumers shifted their buying from department stores to less expensive discounters like Target and Wal-Mart.

Despite Mervyns' nearly six decades of existence, customers Friday mostly expressed indifference about the closure -- a sign of just how poorly the store connected with consumers, analysts say.

"The chain's been going downhill for several years," said Rita Abraham, 36, a shopper at the Glendale store. "Their merchandise just wasn't interesting anymore -- the quality was too cheap. They started dropping way before the economy tanked."

In an environment awash with competitors such as Ross Dress for Less and Kohl's, Mervyns struggled to build an identity, experts said.

First opened in 1949 in San Lorenzo, Calif., by Mervin Morris, the chain was geared toward average, working- to middle-class shoppers.

"We were targeting Joe the Plumber," Morris, 88, said Friday. "We said every customer who came to JCPenney, Sears or Montgomery Ward could be a Mervyns customer. Needless to say, this is a most unpleasant day."

Parent Mervyn's LLC is owned by Sun Capital Partners Inc., an investment firm based in Florida. Sun Capital led a group of investors that bought the retailer from Target Corp. in 2004 for $1.2 billion. Executives at Mervyn's were not available for comment.

As news trickled out Friday of the fire sale, many employees worried about their fates.

Laura Saavedra, a sales associate at a Burbank Mervyns, said she learned of the liquidation through her assistant manager. She said liquidators were taking over the store Nov. 1 and that everyone would be out of a job by Jan. 1.

"We all knew we were going through Chapter 11, but this was a shock," said Saavedra, 21, the mother of two young girls. "We're all very depressed. I feel like a deep part of me was taken away."

Not far from Saavedra's store are a Linens 'n Things and a Shoe Pavilion.

An employee outside Linens 'n Things waved a sign that read "Going out of business." At Shoe Pavilion, small yellow placards touting shoes for $9.99 lined the aisles.

According to its most recent quarterly report released in March, Shoe Pavilion has 113 stores in Washington, Oregon, California, Arizona, Nevada, Texas and New Mexico. It has 44 stores in California. Shoe Pavilion executives could not be reached for comment.

Linens 'n Things was down to 371 locations, 24 in California, according to its website.

To survive, stores will have to appeal to shoppers with deeper discounts on quality brands, said Sung Won Sohn, an economist at Cal State Channel Islands and vice chairman of clothing chain Forever 21 Inc., which is interested in acquiring Mervyns locations.

"People are focused right now on value," he said.

Sohn said Mervyns, which has 129 stores in California, was overstretched.

"During good economic times we overexpanded," he said. "Retailers expanded, not only based on existing demand, but also on anticipated demand. . . . But we've turned a corner now. Quite simply, I think consumers don't have the buying power anymore, and they're scared."

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david.pierson@latimes.com

tiffany.hsu@latimes.com

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