Not-In-Service Merchandise

Service Merchandise (Nashville, Tenn.), once the countryÕs leading catalog-showroom retailer, has announced it will be closing all 200 remaining stores in 32 states and liquidating merchandise and inventory. Closeout sales are scheduled to start January 19 and be completed by the spring.

The retailer has been operating under bankruptcy protection since March 1999. It blamed the weak U.S economy and sluggish sales after the September 11 terrorist attacks for hurting its finances and preventing it from restructuring its balance sheet and emerging from bankruptcy.

The chain, which began as a five-and-dime store in Nashville in 1934, said it lost $180 million in 2000. As of November 2001, it had liabilities of $1.34 billion and assets of $1 billion.

“Given the extraordinarily poor retail economy this past year, especially for jewelry retailers, our company's prospects for successfully reorganizing were compromised to the point that we and our creditors consensually concluded that winding down the business and distributing the substantial value of our inventory, real estate and other assets to our creditors was in their best interest,” Sam Cusano, chairman and ceo, said in a statement.

During the 1970s, the pinnacle for catalog showrooms, Service Merchandise rang up more than $4 billion in annual sales. But the format began to slip in the mid-1980s with the rise of Wal-Mart and other discounters. Service Merchandise repositioned itself as a smaller, self-service retailer specializing in jewelry and housewares. It quit selling consumer electronics, sporting goods, toys and indoor furniture. After entering bankruptcy in 1999, it closed about one-third of its locations.