Gottschalks Inc. (Fresno, Calif.) has extended its credit agreement with GE Commercial Finance Corporate Lending (Stamford, Conn.), expanding its availability to $200 million which it will use to accelerate its new store-opening program and increase its number of store remodels.
“The amended credit agreement presents significant benefits to Gottschalks,” said Greg Ambro, executive vp and chief operating officer. “The expanded and extended facility provides us with a stronger financial structure and greater flexibility.”
The new stores and remodels are part of the regional department store chain’s previously announced V.I.P. (Value Improvement Program), which encompasses a series of new aggressive initiatives being implemented to increase sales, improve operating performance and position Gottschalks for long-term growth.
A year ago, Gottschalks had created a committee to explore its options, including the sale of the company. Dillards Inc. (Little Rock, Ark.), J.C. Penney Co. Inc. (Plano, Texas) and the consortium that owns Mervyns LLC (Hayward, Calif.) were all considered potential suitors, paying as much as $240 million. But in August, the retailer announced it would plunge ahead on its own. “I don’t see us viewing our future as being a regional department store, but as a specialty department store,” chairman and ceo Jim Famalette told the Daily News Record. “We really need to think that the future is a smaller concept, soft-line specialty store.”
According to DNR, new locations will be part of lifestyle-driven, mixed-use retail developments and in smaller spaces, averaging 55,000 square feet instead of the current 120,000-to-200,000-square-foot range.
The first door in the new expansion plan will open next month in Elk Grove, Calif., a suburb of Sacramento. Additional smaller doors in northern California and Oregon are expected to open in fall 2008.
“There’s a change going on in the department store retail world, and it’s not just about consolidation,” Famalette told DNR. “It’s very difficult to identify multiple locations for new department stores to be built. To legitimately wait for large footprints to become available, I might be lucky to open a story every year or two.”