NEW YORK (AP) — A Chapter 11 bankruptcy filing by
Linens 'n Things is the latest sign that the retail sector
is becoming leaner and meaner amid a difficult
consumer environment.
On Friday, the bedding and home-furnishing retailer
filed a petition in bankruptcy court in Delaware and
said it would close 120 underperforming stores,
almost a quarter of them in California.
Ken Perkins, president of research company
RetailMetrics LLC, said the bankruptcy stems from a
combination of operating issues and the lagging
economy.
"There's clearly a shakeout going on in the retail
industry which will continue through the rest of the
year," he said. "I think the weaker players are going to
be in difficult shape here."
The Clifton, N.J.-based company said economic
factors such as the decline in the housing market,
tightening credit markets and a downturn in consumer
discretionary spending, particularly in the housewares
and home furnishings sector, led to a "precipitous
decline" in profitability and liquidity.>/P>
The factors worsened in the first quarter of 2008, the
company said.
Linens 'n Things named Michael Gries of the
restructuring firm Conway Del Genio Gries & Co. as
chief restructuring officer and interim chief executive.
Current CEO Robert DiNicola will become executive
chairman. The company's Canadian stores — which
Linens 'n Things said are among the best performing
stores — are not included in the filing.
The filing is expected to be a boon to rival home-
furnishings retailer Bed, Bath & Beyond Inc.
"The number of stores Linens 'n Things is closing is
equivalent to almost 15 percent of Bed Bath &
Beyond's core store base, so there is significant
opportunity to gain market share," said William Blair &
Co. analyst John C. Murphy.
