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Syms and Filene’s Basement are preparing for their final markdowns.
The tattered off-price clothing chains — whose cluttered stores have struggled to compete since their botched merger two years ago — have filed for Chapter 11 and will stage liquidation sales through the holidays before closing for good early next year.
“This has been a challenging time,” said Syms CEO Marcy Syms, the daughter of the late off-price pioneer Sy Syms, who founded the retailer in 1959.
The filing marks the demise of two icons of retail.
In late-night TV pitches that began in 1974, Sy Syms became famous for his slogan, “An educated consumer is our best customer.”
Meanwhile, 102-year-old Filene’s had built a following after World War II by staging deep discounts on bridal gowns that spurred an annual “Running of the Brides.”
While both retail nameplates had seen better days, yesterday’s bankruptcy filing surprised many suppliers, who noted that Syms had been mostly current on its payments for deliveries. According to one source, the filing was made under pressure from asset-based lender Bank of America.
“The bank figured that holding going-out-of-business sales would be more lucrative during the holidays than if they waited until January,” the source told The Post.
In an odd twist, news of the bankruptcy sent Syms shares soaring nearly 27 percent, gaining $2.05 to close at $9.72. That’s because investors are betting that a sale of the retailer’s real estate could reap a bonanza, as the company has little debt despite its persistent losses.
Still, some insiders raised doubts about the true worth of the real estate, whose most valuable locations include its downtown flagship at 42 Trinity Place.
Syms, which had hired an investment bank recently to explore its strategic alternatives, including a sale, drew a handful of bids from real-estate firms and rival retailers, but “none were high enough to give the board comfort that shareholders would approve,” according to a source close to the talks.
Marcy Syms, who combined the two brands in 2009 when she scooped Filene’s Basement out of bankruptcy for $63 million, blamed the planned shuttering on “the worst economic downturn in our lifetimes,” as well as stepped-up competition.
While upscale chains like Saks, Nordstrom and Neiman Marcus have been rolling out their own off-price stores to clear excess goods, luxury discount sites like Gilt Groupe and Rue La La have fueled growth by paying top dollar for the most desirable overstock fashions.
That created problems as Marcy Syms tried to continue her father’s scavenging strategy at Filene’s Basement, whose customers had been accustomed to bargains on better fashions from Europe.
“Marcy insisted on waiting until the end of the season and buying what was left over for cents on the dollar,” according to one former exec. “If you wanted to have a cashmere program, you couldn’t buy anything up front, so you ended up with bad colors and odd sizes.”
In recent months, Marcy Syms had handed day-to-day control of the company to turnaround firm Alvarez & Marsal, while the investment bank Rothschild searched for a buyer.
At the same time, activist investment firm Esopus Creek Advisors this year sued Syms, demanding books and records that might give evidence of potential mismanagement.
Indeed, the bankruptcy filing caps several tumultuous years for Syms investors, who revolted in 2008 when the off-price retailer tried to delist its shares.
At the time, The Post had cited investor concerns that the company was trying to take itself private on the cheap — a suspicion that appears to persist, given yesterday’s run-up in the shares.
In the face of these concerns, Syms execs had repeatedly denied any nefarious motive.
“I always read The Post,” Sy Syms, who died in November 2009, told The Post in an interview after a raucous July 2008 shareholder meeting. “But I never believe it.”