If You Can Stand the Heat

Despite filing for bankruptcy yesterday, Lechters Inc. (Harrison, N.J.), the housewares retailer, has arranged for $86 million in financing that will allow it to go forward with an extensive renovation program. Lechters had previously announced that it would be converting a majority of its stores to a kitchen-based concept called ThinkKitchen.

Two new ThinkKitchen stores and the conversion of four Lechters stores to the ThinkKitchen banner are expected to be completed by next month, with the rest of the switch completed by October. Kitchen and cookware have traditionally been the core of Lechters product selection. The merchant's other product categories will be phased out over the course of this year.

Lechters operates more than 500 stores in 41 states and Washington, D.C. Nearly 80 percent of sales has come from its full-price stores, which include Lechters Housewares and Lechters Kitchen Place; the rest has come from off-price chains Cost Less Home Stores (which it is discontinuing) and Famous Brands Housewares Outlet.

Company executives said Lechters chose bankruptcy to gain breathing room on mounting landlord lease claims following the store closings and on a $37 million bond payment due in September.

“We recognized some time ago that to compete in the existing retail environment, it would be necessary to make changes in our business to better differentiate ourselves in the marketplace and provide consumers with more compelling reasons to shop our stores,” said ceo David Cully, who arrived from Barnes & Noble last year.

With the fast growth of specialty chains such as Williams-Sonoma and with popular, designer home lines emerging from discounters such as Kmart and Target, there has been a shift away from small specialty retailers. To compete, smaller chains are having to further differentiate themselves, whether on price or through a new mix of offerings. Lechters has said is trying to reposition itself by focusing exclusively on the kitchen and by meeting what it said are customer requests for higher-quality merchandise.