Bankrupt Again

McCrory Corp. (York, Pa.), the discount retailer that survived five years of bankruptcy protection in the 1990s, has filed for Chapter 11 bankruptcy protection again.

“It's mainly just a liquidity crisis,” said Laura Davis Jones, the company's bankruptcy attorney. “We have some stores that are not as profitable as they should be and are cash-drained.”

McCrory operates about 175 discount variety stores under the names Dollar Zone, McCrory, G. C. Murphy, J. J. Newberry and T.G.& Y. Most of its stores are located in the Northeast, though it also has stores in Arizona, California, New Mexico, Oregon, Texas and Washington. Once 1300 stores strong, McCrory divested more than 600 stores while under Chapter 11 bankruptcy protection from 1992 to 1997. It exited bankruptcy in 1997 when HGG Acquisition, a firm controlled by financier and McCrory chairman (and main creditor) Meshulam Riklis, bought the company.

McCrory's troubles come at a time when the industry as a whole appears to be doing well. McCrory competes with the likes of Dollar Tree, Dollar General and Family Dollar in a low-price niche market below that of Wal-Mart, Kmart and Target. “It's an extremely competitive niche in retailing,” said analyst Barbara Miller of Goldman, Sachs & Co., “with a lot of very strong and well-capitalized competitors. Family Dollar, which has about 4000 stores, has been growing at 10 percent to 15 percent annually. Dollar Tree, with about 1900 stores, also is doing well.”