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Gottschalks going out of business
Gottschalks has been an anchor at Santa Rosa's Coddington Mall since 1997.
PD FILEPublished: Tuesday, March 31, 2009 at 8:21 a.m.
Last Modified: Tuesday, March 31, 2009 at 8:01 p.m.
Gottschalks will start its final sale this week and shut down by summer after it failed to attract a viable bid to keep the bankrupt department store chain alive.
“Regrettably, liquidation is now the only path for our company,” Gottschalks chairman and chief executive Jim Famalette said in statement Tuesday. “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.”
A consortium that ran the store-closing sales for bankrupt retailers Mervyns and Circuit City won an auction for Gottschalks assets that went late into the night Monday.
When the liquidation sale is complete, all 58 Gottschalks stores will close, including the 128,000-square-foot department store anchoring the south side of Coddingtown Mall in Santa Rosa.
“It’s a very sad day for our people,” said Joe Toth, manager of the Coddingtown store. “That’s what we’re concerned about right now.”
Customers and neighboring mall merchants lamented the news.
“I’m just going to be heartbroken if it closes,” said 87-year-old Santa Rosa resident Lorraine Daniloff. “I don’t know where I’m going to shop.”
Daniloff was planning to shop Tuesday for clothes for her grandson. She likes the store because it’s clean, has a large selection of items, and has friendly, attentive staff, she said.
“We love this store,” agreed friend Ellen Vitorelo, 89. “They are going to miss this out here at Coddingtown.”
Merchants agreed that the loss of Gottschalks will be a blow to a mall already reeling from an exodus of smaller local merchants.
“It’s going to hurt tremendously to have an empty building down there,” said David Astobiza, owner of Sole Desire shoe store.
Officials at Simon Property Group, the nation’s largest mall owner and co-owner of the mall since 2005, said they, too were disappointed by Gottschalks’ departure.
“They’ve been a good tenant at Coddingtown for many years,” said Kim Hall, marketing manager for Coddingtown and Santa Rosa Plaza, which Simon owns. “We’re sorry to see them go. Unfortunately, this is something that is out of our control.”
Founded in Fresno in 1904, Gottschalks operates 58 department stores and three specialty stores. It has about 5,200 employees in California, Oregon, Washington, Alaska, Idaho and Nevada. The Coddingtown store employs about 80 workers.
After it filed for bankruptcy protection in mid-January, analysts were skeptical the retailer could find a way to survive given the harsh retail climate and frozen credit markets. As a regional retailer, Gottschalks has less buying power than nationwide department stores like Macy’s and Target.
“When they filed bankruptcy, I didn’t think they would ever come out of it,” Astobiza said.
The winning offer was submitted by a team of liquidation specialists that was selected in March as the lead bidder for the company’s assets. The group includes Great American Group, SB Capital Group, Tiger Capital Group and Hudson Capital Partners. It outbid a rival liquidation group that was also vying to sell off Gottschalks’ merchandise.
A Chinese conglomerate that wanted to keep Gottschalks in business never submitted a viable bid, Famalette told The Fresno Bee. The Shandong Commercial Group — controlled by the government in China’s Shandong Province — was unable to bring together its financing and clear regulatory hurdles by the Chinese government in time to satisfy Gottschalks’ creditors and provide a viable bid at the auction, he said.
“We tried as hard as we could to make this work with the Shandong people, but there were too many things financially, with the size of the deal, and regulatory issues, that they just couldn’t get done in time,” Famalette told The Fresno Bee.
The deal will be reviewed Wednesday by a U.S. Bankruptcy Court judge in Delaware. If the court approves the deal, store closing sales will begin Thursday or Friday, Famalette said. The sales are expected to take 45 to 90 days.
The court is also expected to set a date to auction off the company’s real estate holdings. Gottschalks put all of its stores on the market last week.
Its departure will open another hole in Sonoma County’s retail landscape. Over the past four months, Mervyns, Circuit City, Linens `N Things, Shoe Pavilion and KB Toys have closed their stores in Sonoma County, while Home Depot is shutting its Yardbirds outlet in Petaluma.
Several other retailers have postponed or canceled plans to open stores in Sonoma County, including Wal-Mart and Whole Foods Market.
Under an agreement with the liquidation team, current Gottschalks store employees may be retained to help with closing sales.
Rohnert Park resident Jan Zastrow, 71, said a good friend who works at the store was “in tears” Tuesday upon hearing the news.
Zastrow, a native of Fresno, said losing Gottschalks will be losing a long-time friend.
“My mother was one of the first people to have a Gottschalks credit card back in the 1940s,” she said. “I’m just so hurt.”
You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.
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