When suggestions were first raised Fortunoff might be sold by owner NRDC, things didn’t look good. But now it appears the company is fighting for its life.
A Bloomberg story yesterday reported that the company was talking to liquidators – and a Women’s Wear Daily story today (subscription) continues that tack, noting that Fortunoff “is set to again file for bankruptcy court protection, possibly as soon as Thursday. But instead of finding a white knight, this time the chain could be headed toward liquidation.”
A Fortunoff spokeswoman told me yesterday: “I haven’t heard anything about liquidators but I do know that potential buyers are in negotiations, which is positive.” However, according to WWD, there are “no takers” as yet, except for the Hilco Organization, which “invests in, and consults for, retailers, brands and manufacturers, and also conducts liquidations, such as Circuit City.”
One knowledgeable observer told me that current owner NRDC’s one year wait to take action on the chain may have been deliberate. By doing that, this person said, legally NRDC “exceeded the period of time to attack preferences to an insider” regarding credit claims, and put themselves in a much better position financially (versus their creditors). One has to feel for their vendors, many of whom got hurt by its first Chapter 11 filing, but stuck with the company – and now may get hurt again.
Whatever happens, this is looking like pretty sad story – for its employees, the vendors and one of the industry’s great brands. In the Northeast, there aren’t many retailers with the reputation of Fortunoff, as the comments in this local newspaper story demonstrate. This industry has become too much of an easy prey for investors like NRDC, who don’t care about the industry and only want to trade these businesses back and forth like baseball cards.
One person I talked to yesterday remarked that Fortunoff’s advertising last Christmas seemed to lack its usual class. “It looked like a going out of business sale,” this person said. Let’s hope not …
UPDATE: Fortunoff has filed Chapter 11. Still looking for a buyer. Will bring more info as it becomes available …