Kevin Clifford/Nevada Appeal
Blaming the "state of the economy" and difficult operating conditions, Mervyns announced Tuesday that it had filed for bankruptcy protection.
The Hayward, Calif.-based department store chain, with 176 stores in California and six other states, said it intends to restructure the company's debt and realign its business operations. The chain said it intends to keep its stores open during the Chapter 11 reorganization process.
"After careful consideration of available alternatives, the company's management board determined that a Chapter 11 filing was a necessary and prudent step that allows us to operate our business without interruption as we seek to restructure our debt and other obligations in a controlled, court-supervised environment," John Goodman, Mervyns chief executive officer, said in a statement.
Mervyns includes a 60,700-square-foot store at 3871 S. Carson St. in Carson City. The store employs between 100 and 125 people. The store sits on about five acres of land.
"Mervyns stores will remain open and business will continue as the Company moves through the bankruptcy process," the company noted in a release.
The company is owned by private investment firm Sun Capital Partners Inc. and other investors.
Questions about the company's future had been building since the retailer stopped providing financial information to at least two credit-monitoring firms, prompting some vendors to halt shipments as the back-to-school shopping season was heating up.
Mervyns, which has struggled for years, was in a particularly difficult situation as the economy weakened and consumers, especially those with low incomes, scattered to stores where they hoped to save more money, such as Wal-Mart and dollar stores, said Marshal Cohen, chief industry analyst for NPD Group.
"They're one of the groups in the retail sector that's going to be most affected by the down trending economy," Cohen said. "It's just too much for them to absorb all of these forces coming on them all at once and eroding their market share."
Mervyns joins a growing list of retailers that have sought Chapter 11 bankruptcy protection this year, including Shoe Pavilion, Sharper Image Inc., Steve & Barry's and Linens 'n Things.