MONTGOMERY WARDS CLOSING
Wards files for Ch. 11
Chicago retailer Montgomery Ward announces store closings, layoffs
By CNNfN Staff Writer John Chartier
December 28, 2000: 6:30 p.m. ET
NEW YORK (CNNfn) - Struggling retailer Montgomery Ward said Thursday it has filed for Chapter 11 bankruptcy protection and will shut down all of its stores in the coming months, bringing an end to one of the oldest privately held department store chains in the United States.
Chicago-based Wards said it simply could not produce the positive financial results to turn the company around after emerging from a previous bankruptcy.
"Today's filing comes after an exhaustive exploration of options for continuing the business," said CEO Roger Goddu. "Overall weak holiday sales and a very difficult retail environment simply did not permit us to complete the turnaround that might have been possible in an otherwise thriving economy. Sadly, today's action is unavoidable."
Wards also said it will immediately eliminate about 450 national office jobs and close all of its 250 stores and 10 distribution centers nationwide over the next several months. Reductions in its staff of 30,000 are anticipated during the first and second quarters of 2001.
Wards associates learned the news in a series of meetings at the company's stores and offices.
Dozens of employees were seen leaving the company's headquarters with boxes in hand Thursday.
Earlier in the day Crain's Chicago Business reported on its Web site that the chain was expected to lay out a broad liquidation plan, but that it was not yet clear how widespread the closings will be.
Then the company issued a statement shortly before the markets closed.
In August 1999, Chicago-based Ward's emerged from Chapter 11 bankruptcy protection, after which GE Capital Service, a subsidiary of General Electric (GE: Research, Estimates) acquired a 50 percent stake in the company. At the time, Wards closed 48 stores and cut 3,800 jobs as part of its restructuring effort.
Despite investing large amounts of capital and instituting management changes, the 250-store chain continued to post huge losses, said Martin Sankey, an analyst who covers GE for Goldman Sachs.
"In recent years it has lost considerable amounts of money. The losses have been considerable, but they have not compromised GE's ability to report earnings growth of 17 percent annually at GE Capital," Sankey said. "I think it would be fair to say that GE has been trying to fix Montgomery Ward."
Retailing experts said Wards has had trouble surviving in a marketplace with such powerhouses as Home Depot (HD: Research, Estimates), Target (TGT: Research, Estimates) and Best Buy (BBY: Research, Estimates).
The news comes two days after discount chain Bradlees announced it was
shutting its doors after filing for Chapter 11 bankruptcy protection.
Wards was founded in 1872 as a mail-order company, and opened its first retail store in 1926. The company employs 37,315 people nationwide and reported $3.2 billion in revenue in 1999.
For decades, Wards and Sears (S: Research, Estimates), enjoyed similar status as popular all-American companies. Both began to see declining profits in the 1950s and 1960s as consumers' tastes changed. Both retailers limped along through the 1970s and 1980s until Arthur Martinez took the helm at Sears in the early 1990s, overhauling the brand with a popular new "softer side of Sears" campaign, helping to turn the company around.
But Ward's continued to languish, losing more market share to bigger, more contemporary competitors.
"They failed to establish an identity for themselves, a niche, and that makes it difficult for it to stand out," said Kurt Barnard, president of Barnard's Retail Trend Report in Upper Montclair, N.J. "They never gave shoppers a reason for preferring it to any one of its rivals. It was just there, like soaking corn flakes."
Deadmalls.com fan TK sent us these pictures from St. Joseph, Missouri
of the East
Hills Shopping Center Wards parkinglot, first taken during last week of
store operations, then a week later...