So I’ve talked to people about the Robbins Brothers bankruptcy plan, and it’s certainly an interesting one:
– There are no plans at present to close any of its 16 stores. The chain will be sold into two pieces. As we’ve noted, the first piece – six stores, in the Houston and Chicago areas – will be sold to Spence.
– Here is the unusual part. The second chunk – the remaining ten stores (in California and Dallas/Arlington) – will be sold to Robbins Bros Jewelry, an affiliate of Weston Presidio, the investment firm that currently owns 49% of Robbins Brothers (which is the entity that has gone Chapter 11 and will soon no longer exist). That means those ten stores, as well as all the company’s inventory, are basically being sold to one of its owners, which then takes control of the company after having all the benefits of Chapter 11 (settled debts, re-negotiated leases, etc.)
– With Weston Presidio now in total control, the Robbins family will no longer have any ownership of the company. Steve Robbins, current CEO, is not expected to continue with the company in a management role.
All this, I should add, still has to get approved by the court.
As to why the company had to file, most people I spoke to blamed the company’s too rapid expansion. After it was recapitalized in 2004, it went from seven stores to 16 in about four years, and the plan was to eventually hit 50. Apparently, the expansion’s speed was in part to prevent competitors from stealing its format or grabbing prime real estate.
A big roll-out like this may have been possible in more hospitable times – the company has a great reputation in its local area (and its sales training mantra was “no discounts,” always good to hear). Unfortunately, the Southern California economy hit the wall, Houston was hit by hurricanes, and the Chicago stores never really took off – resulting in the action we just saw.