Chiasso Inc. (Chicago), the high-end specialty home accessories and gift chain, has filed for Chapter 11 bankruptcy protection, citing an ill-timed expansion and high overhead costs that hurt the store as the economy slowed.
The retailer said it intends to close 10 of its 14 stores, and reorganize as a catalog and online retailer.
“The stores have struggled tremendously over the last 15 months,” president and ceo David Marshall told Crain's Chicago Business. “We were sitting on high overhead in anticipation of rapid growth. We had stores scattered all over the country and had planned to fill them in (starting) with another four to five stores this year. That all changed with the difficult fourth quarter in 2001.”
Retail sales in general have suffered as the economy slowed and tourist traffic dropped in the wake of the September 11 attacks. Chiasso's recent holiday sales were “the worse in recent memory,” according to the court filing. Its stores are in malls, particularly in luxury malls such as The Mall at Short Hills (N.J.), Somerset Collection (Troy, Mich.), Desert Passage (Las Vegas), Willow Bend (Plano, Texas) and the like. And these malls, plus many tourist spots, are places shoppers have been avoiding in particular.
“They really operate with the discretionary part of people's income,” a retail consultant told Crain's. “So they got significantly hurt by 9-11 and when the economy went down.”
Marshall, who was coo at Bigsby & Kruthers Cos. when that elegant Chicago-based menswear retailer went out of business in 2000, said Chiasso expects to emerge from Chapter 11 in six months by focusing on its web site and catalog division, which have accounted for almost half of the company's $15 million to $20 million in annual sales.
Store closings will begin at the end of this week and are scheduled to be complete by the end of February. The stores slated to be shuttered are in Scottsdale (Fashion Square), Ariz.; Newport Beach (Fashion Island) and Palo Alto (Stanford Shopping Center), Calif.; San Francisco (Center); Boca Raton (Town Center), Fla.; Las Vegas; Short Hills; Plano; Arlington (Fashion Center at Pentagon City), Va.; and Seattle (Westlake Village). Stores will remain open in Water Tower Place, Chicago; The Prudential Center, Boston; Troy; and Tysons Corner Center, McLean, Va.
Chiasso was founded as a single store in 1985, in a basement boutique on Chicago's Chestnut Street in the city's Gold Coast district. It was sold by its founders to an investment group in 1997.
“What really set our store apart [was] the store design,” according to the company's web site. “We were perhaps the first 'design shop' [not] to give itself the 'gallery' treatment. . . . We displayed our merchandise in a whimsical, almost irreverent way, and encouraged our customers to 'Please Touch.' . . . By the end of our first year we had become a 'must see' for visiting tourist and local residents alike.”
The site reveals that the name Chiasso is an Italian/Swiss border town that was an original meeting place for Ettore Sotsass' Memphis Design Group. “It is also a slang expression used in some parts of Italy that means 'to cause an uproar or sensation.' . . . Years ago, an Italian tourist told us 'chiasso' is word that would best be used to describe the unrestrained energy (read noise) that comes from an unattended kindergarten class. We liked that definition too.”