Mervyn’s to Shut its Doors

Mervyn’s LLC (Hayward, Calif.), which filed for Chapter 11 bankruptcy protection in July, has confirmed that it plans to begin liquidation sales at its remaining 149 stores and close its business.

The retailer said that after completing a thorough analysis of all available options, including a sale of the company, the board determined that holding liquidation sales during the holiday season was the best way to maximize value for the company's creditors. It also cited a challenging retail environment and declining liquidity as factors forcing the company's liquidation.

Mervyn’s, once with stores up and down the West Coast and elsewhere around the U.S. when it was part of Target Corp. (Minneapolis), now operates mainly in California and has seen its sales drop further as the state is among the hardest hit by the real estate slump.

The Chapter 11 bankruptcy code typically allows companies to retain control over the selling off of assets. The company said it intends to retain an outside professional services firm to assist in the liquidation sales of inventory.

“We are disappointed with this outcome but the company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action,” said ceo John Goodman. “We are confident that the deep discounts available through going out of business sales will drive significant traffic in our stores.”

Mervyn's is owned by buyout firm Sun Capital Partners Inc. (Boca Raton, Fla.).