Bankrupt retailer Linens ‘n Things may close additional stores beyond the 20 percent of its chain that it has already pledged to shutter, sources told The Post.
The Clifton, NJ-based home-furnishings retailer said earlier this month it will close 120 laggard stores in its chain of 589 locations, which spans 47 states.
But the company and its creditors are considering closing an additional 50 to 100 stores in moves that could eliminate more than one-third of the chain, sources said.
Linens ‘n Things – which filed for Chapter 11 earlier this month after being taken private in 2005 for $1.3 billion by billionaire Leon Black’s Apollo Management – might become more profitable in the short term as it eliminates money-losing locations.
But it will face a tough battle against larger rivals. Bed Bath & Beyond, which this year plans to add 50 to 55 stores to a base of 971, will hold the upper hand when it comes to size-related efficiencies.
Still, some industry observers say Linens ‘n Things may succeed with a well-focused strategy that chooses to exit some regions entirely.
One of its most difficult markets has been California, whose flagging economy has been hit particularly hard by soaring energy prices, said Britt Beemer, president of America’s Research Group, a Charleston, SC, retail consultant.
“If they’re really serious about coming out of bankruptcy as a stronger company, they should look at which parts of the country they should vacate altogether,” Beemer says. “A bad retail location is like cancer – you only get one chance to kill it.”
Indeed, Linens ‘n Things has already decided to close about 25 locations in California – by far the largest number of closings planned for any one state, according to court documents.
During the weeks leading up to its May 2 bankruptcy filing, Linens ‘n Things routinely opened California stores late and closed them early in a bid to curb their steep electricity bills, sources said.
While it pleads with all of its landlords for lower rents, the company must make final decisions on whether or not to reject leases by late November.
“My guess is there are landlords out there who will give them more time,” said David Pollack, a lawyer at Ballard Spahr Andrews & Ingersoll who represents landlords in the bankruptcy. “Nobody in the retail business wants to have a store close in November.”