Kohl's Corp. (Menomonee Falls, Wis.) and Forever 21 Inc. (Los Angeles) have won a joint bid to move into 46 soon-to-be-empty stores vacated by bankrupt Mervyns LLC (Hayward, Calif.). Mervyns filed for Chapter 11 bankruptcy protection in July and decided to liquidate in October.
Kohl’s will move into 31 locations, while Forever 21 will get 15, pending bankruptcy court approval. Most of the locations are in California, where the mid-level department store chain had a strong presence for decades. When it went under, Mervyns was operating 149 stores. Some of the remaining leases may be sold to other retailers later this month, but most of them are expected to be canceled and the properties returned to their landlords' control. The stores to be assumed by Kohl’s and Forever 21 are considered among the most desirable locations.
The deal was negotiated through an auction overseen by bankruptcy lawyers, in which Kohl's and Forever 21 bid $6.25 million for the right to take over the failed retailer's leases.
“We got exactly the stores that we wanted,” said Christopher Lee, senior vp at Forever 21, which would take over 15 Mervyns sites in 2009 under the proposed deal. “We've waited a long time for this, and it finally came for us.” Lee said the specialty trendy-but-affordable retailer plans to convert the locations early next year.
“We are pleased with the results of the auction,” said Kohl’s ceo Kevin Mansell. “These locations provide increased presence in under-penetrated markets.”
The average Mervyns footprint was 80,000 square feet.