Jacobson's Files for Bankruptcy Protection

Jacobson Stores (Jackson City, Mich.), the troubled 133-year-old department store retailer known affectionately as Jake's, has filed for Chapter 11 bankruptcy protection and will be closing five of its remaining 23 stores.

With a bankruptcy judge's approval, the retailer plans to close two underperforming stores in Ohio (Columbus and Toledo) and three in Florida (Clearwater, Osprey and Tampa). The planned closures would eliminate the retailer's Ohio presence and leave eight stores in Florida. The company also operates Jacobson's stores in Michigan, Indiana, Kentucky and Kansas.

“There will be no interruption of store operations for the 18 remaining stores,” said a company spokesman. “Our intent is to move forward with our best stores, and the court-approved reorganization does allow us to be competitive.” The retailer has reached an agreement for $130 million to finance its reorganization.

“They've solidified their bank relationships so that they can ensure an influx of inventory,” said one retail consultant. “They can't sell from an empty shelf, and that's what they were facing.

“They're somewhat of an anomaly,” he continued. “They're a 23-store chain with operations in six different states. They're competing with the Nordstrom's of the world, and they just don't have the critical mass to able to keep up.”

In December 2001, Jacobson's reported a third-quarter net loss of $13.9 million and said it would have to default on a $150 million line of credit unless it negotiated new deals with its lenders.