Boscov’s Files for Bankruptcy Protection

As expected, Boscov’s Department Store LLC (Reading, Pa.) has filed for Chapter 11 bankruptcy protection and will close 10 of its 49 stores, including seven that it recently purchased from Macy’s Inc. (Cincinnati).

The 97-year-old firm said it is considering a sale of the chain but otherwise will continue to operate without interruption during the reorganization. The retailer, America’s largest family-owned independent department store, says filing for Chapter 11 protection gives it the tools and time to strengthen its balance sheet.

Boscov’s has stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. It is closing five stores in Pennsylvania (Monroeville, North Wales, Langhorne, Pittsburgh and Harrisburg); three in Maryland (Glen Burnie, Owing Mills and Baltimore); one at the Monmouth Mall in Eatontown, N.J.; and one in Danville, Va.

The company recently acknowledged that some suppliers have stopped shipping merchandise to the company. Boscov’s blamed credit issues. Boscov’s posted sales of slightly more than $1.25 billion in 2007.

In a declaration by Michael Hughes, Boscov’s executive vp for capital development, the company is seeking court approval of a $225 million debtor-in-possession credit facility with Bank of America as the administrative agent. Hughes said in his affidavit that the “collapse of the housing market, skyrocketing energy and gasoline prices and steadily increasing food costs resulted in a decline in discretionary spending by consumers.” He noted the tightening of the credit markets added to the constraints of the broadline retailing industry that already had “operated on thin profit margins,” which in turn resulted in inadequate liquidity levels.