Friedman’s Inc. said Tuesday that it will seek the bankruptcy court’s approval in its chapter 11 reorganization to close up to 165 underperforming stores in 17 states and sell in excess of $25 million of inventory through a court-approved disposition process. Following the completion of the “store-closing program,” Friedman’s will operate approximately 481 stores in 20 states.
The store-closing program, which was reviewed by the Official Committee of Unsecured Creditors appointed in the company’s chapter 11 cases, was approved by the Company’s Board of Directors on Monday and pleadings were filed in the Bankruptcy Court on Monday evening. The Bankruptcy Court has scheduled a hearing on the store-closing program on March 2, and will also consider procedural matters related to the store-closing program at a separate hearing on Tuesday.
The Savannah-based company said the decision to close the stores followed a review of its store operations, which was part of the company’s reorganization strategy, said Sam Cusano, Friedman’s Inc. president and CEO.
“We evaluated our store operations, including each store’s historical operating results; recent performance during the 2004 holiday selling season; the age, location, physical condition, and operating lease for each store; each store’s credit and collection performance; regional economic factors; and infrastructure costs to service these stores,” Cusano said. “As Friedman’s moves forward in its restructuring, this action will allow the company to focus its resources on those stores that have stronger prospects for future growth.”
The company noted the stores plan to continue to operate until all merchandise is sold. Cusano said the stores will remain open and operate as usual while the company prepares for inventory disposition sales, which, pending court approval, are expected to begin the first week of March.
Friedman’s filed chapter 11 petitions on behalf of the company and seven of its subsidiaries in bankruptcy court in Savannah on Jan. 14.