LNT: 33 Years Later, Saying Goodbye to An Old Friend

Brent Felgner, October 20, 2008

Linens 'n Things rose out of the ashes of bankruptcy and now it will return to much the same state: ashes.

The chain was Eugene Kalkin's baby. The former Stern Bros.-Allied Stores merchant bought seven of the stores in which he had earlier partnered with Daylin out of the bankruptcy court in 1975.

That was LNT's beginning: seven stores, $2 million in sales.

Kalkin claims too many years have passed since 1983, when he sold the chain to Melville Corp. (now the drugstore giant CVS), for him to feel any specific or personal pain over its loss. Yet the subject clearly arouses his passions.

"It goes back to my first time in business for myself, which was November 1958 — I got into business with $100,000 in capital," Kalkin recalls, referring to Great Eastern Linens, which was a leased department at Great Eastern Mills, one of the nation's earliest discount store experiments. "That first business seamlessly merged into the second business." Great Eastern Linens was the progenitor of Linens 'n Things.

"It's much tougher to get started in retail today," he acknowledges.

Could he have foreseen this end?

"Oh no. No way. After all, this business was a very healthy, profitable, growing business when I sold it to Melville," he says.

Kalkin is sensitive to appearances. He does not want to come across as negative, and refuses to second-guess management decisions setting the chain's direction over the years. But he does offer a matter-of-fact glimpse into the retailing and financial fundamentals of doing business today. It's just different, Kalkin says.

"Once Wall Street gets involved … and certainly when a buyout firm like Apollo gets involved, it's not the same retail business — it can't be," he explains. "The basic issue in all of these retail companies is that when there's a leveraged buyout, the [investor] tries to get their money out as soon as possible. And that means they can't run a business with style — they can't run it with class."

"So they're running the business just for the numbers, not for the game, if you will. To me, the retail business has always been a wonderful game of merchandising," Kalkin says. "If you love the retail business, you love the excitement of the seasonality of the product, and bringing in fresh product and seeing how your customers respond to it. There has to be an inspired merchant to do the job. You've got to have the sensitivity in your fingertips."

LNT's inventories were "dirty," Kalkin says, because management failed to take the markdowns, likely because they were thinking of the profit-and-loss statement and its influence on the banks or other lenders.

"I always cleaned our inventories twice a year," he explains. "Even when things were tight, we always knew we were going to come back next season and fight a new ballgame."

Kalkin concludes: "The industry will be sad to see it go. Many of the manufacturers I did business with probably had a 30-plus year run with Linens 'n Things."

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