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End of the Line for Gottschalks

$280M Inventory Being Liquidated

James Mammarella -- Home Textiles Today, April 6, 2009

Inventory valued at approximately $280 million is being liquidated in the going-out-of-business sale at western regional department store chain Gottschalks.

Following final bankruptcy court approval on April 1, GOB sales started last Thursday at all 58 locations in California and five other states — which will all be permanently closed by July 15.

With a liquidator consortium making the high bid for its assets on March 31, Gottschalks acceded to the deal and the court then approved the sell-off.

A joint venture of four liquidators — Great American Group, Hudson Capital Partners, SB Capital Group, and Tiger Capital Group (all LLCs) — submitted the prevailing bid at the auction in Wilmington, Del.

Gottschalks, founded in 1904 and growing by 2003 to more than 70 stores in California and five other Western states, had 55 full line stores and three specialty outlets when it filed for Chapter 11 on January 14. The company last week released this statement by Jim Famalette, chairman and ceo: "Despite all our efforts at earnest negotiations, we were unable to reach an agreement with our creditors, lenders and bidders to structure a going concern bid by the court-imposed deadline. 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."

After a string of just-profitable years, the retailer posted a net loss of $12.4 million on 2007 sales of $628.6 million. Sales fell to $563.2 million in 2008; a net loss of $19.7 million was recorded for the first nine months of the fiscal year.

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