Gadzooks! It’s Closing Shop

Gadzooks Inc. (Carrollton, Texas), the teen apparel retailer that has been in bankruptcy since February 2004, has announced it has given up plans to reorganize and will sell off its assets, including leases at its 243 stores in 40 states.

The company said it has bankruptcy court approval to go ahead with the sale.

Gadzooks recently posted a 3.7 percent decline in December sales. This month, investors pulled out of a financing arrangement, and lenders were reluctant to wait for new agreements, according to Michael O’Hara, managing director of Financo Inc. (New York, Boston and London), the chain’s investment banker.

Bids for assets will be accepted until Feb. 4, 2005, and the highest offer will be announced no later than February 7.

Gadzooks was founded in 1983 and enjoyed success in the 1990s. The chain of mall stores struggled with the fast-changing teen market, however, and after a string of modestly profitable years, it lost $1.3 million in 2003 and lost $62 million in 2004.