Another one bites the dust

Jennifer Negley, January 1, 2001

Bradlees' liquidation certainly came as no surprise to anyone involved with retailing. In all honestly, the big question coming out of the third quarter-when the retailer's net loss ballooned from $7.6 million in third quarter 1999 to $18.3 million-was whether the company could make it through the holiday selling season and into 2001 before filing Chapter 11.

It got darn close but ultimately ran out of steam. Instead, the 42-year-old retail entity joins the lengthy list of former regional chains that collapsed in the face of encroaching competition from stronger, often national, companies: Caldor, Jamesway, Stuarts, Venture, Clover, Rose's, and so on.

In truth, Bradlees was unlikely to have made it even this far had it not been for the extraordinary vigor of consumer spending in 1999 and the conversion of 155 rival Caldor stores into Ames' format, which targets an older and more working-class base of consumers than did Caldor or Bradlees.

Only nine months ago, Bradlees reported a fiscal year performance that saw sales jump 11.6 percent from $1.38 billion to $1.54 billion. Due to restructuring, the company also reported a net loss of $9.3 million vs. a net income of $286 million-with most of that income attributable to a one-time net gain of $311.3 million associated with the its emergence from Chapter 11 and the adoption of fresh-start reporting.

Nonetheless, the outlook seemed sufficiently hopeful at the time to prompt chairman and ceo Peter Thorner to proclaim fiscal 1999 as the company's breakthrough year.

To justify that claim, he pointed to the company's formidable 11.9 percent comparable store sales gain for the year --one of the best in the industry. The year had been promising enough that the company opened two new stores, installed a new warehouse management system, and paid off a $40 million convertible note ahead of schedule.

Thorner believed the results demonstrated that Bradlees had defined a niche in the marketplace and that the company was well-positioned to compete going forward.

In the days since the Dec. 26th announcement of its Chapter 11 filing and intention to liquidate, much blame for Bradlees' travails has been laid on unseasonable weather in the first half of 2000, the softening retail environment in the second half, rising interest rates, higher gas and heating oil prices.

The truth is that Bradlees was simply out-maneuvered during the early '90s and was not able to get itself into position to compete effectively once it found itself outgunned by Wal-Mart, Kmart, Target and Kohl's in the late '90s.

Bradlees' 105 stores in Massachusetts, Connecticut, New Hampshire, Maine, New York, New Jersey and Pennsylvania face off against more than 250 Wal-Mart stores. Even worse, Target began opening stores in Bradlees' trading areas only three years ago and already has nearly half as many stores in those markets. Ditto Kohl's, which has also been moving aggressively into Bradlees' Northeastern territory over the past 24 months.

As one industry analyst noted in the aftermath of the filing, it's not easy to survive when competitors have eight to 20 times more stores than you do.

The biggest problem was that Bradlees had ceased to be relevant to enough consumers. Yes, it does have some newer stores in some good locations. But it also has what's known as "the little brown Bradlees," cramped and aged stores that hearken back to discounting as it was done in the 1970s.

It's a sorry tale. What's sorrier still is that it is not an uncommon one.

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