Gottschalks ... Possible Bankruptcy?

January 9, 2009 7:08:14 PM PST
Big questions about the future of Gottschalks. There are reports the company is in a last ditch effort to avoid bankruptcy.Officials of the more than one hundred year old Fresno based department store chain are not talking. It's been reported they are in negotiations with two foreign companies, and are hoping to stay afloat. But with department stores all across the country failing, the Fresno based chain faces a real challenge.

Talk that Gottschalks is failing had some shoppers rushing to take advantage of sales, and cash in gift cards.

Dawn Suderman said, "Had a gift card and heard on the news that they weren't sure whether Gottschalks was gonna be around, and thought I should use it."

Reports in the Fresno Business Journal, and the national retail publication Women's Wear Daily, make it sound like the company was on the verge of bankruptcy and liquidation. National Retail Consultant Howard Davidowitz feels the struggling company may have no choice.

"In my view they have no choice because once the suppliers stop shipping you and you lose your credibility because of your financial condition, you have no choice other than to file bankruptcy."

Company officials have not commented on the record, but one executive at the company headquarters told Action News rumors of the company's demise are not true. He also denied reports the company had told it's employees to cash their paychecks as soon as possible.

According to Women's Wear Daily, Gottschalks is negotiating with Chinese Company Everbright, and the Spanish Department Store Chain El Corte Ingles, which already owns a chunk of Gottschalks. Those negotiations were reported to be taking place today. The Business Journal also reports Gottschalks has been in talks with a liquidation company that handles going out of business sales.

"Kind of scary. Kind of a sign of the times and where we're really at."

Davidowitz says where we're at is in desperate times for all retailers, especially department stores.

"So, everybody in the department store industry, discretionary, apparel and home are terrible. So they're in a bad segment and they are a teeny player in that segment."

Gottschalks did announce sales at its 58 stores were down nearly ten per cent in December as compared to last year.

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