Washington state - Bankruptcy Ch. 11 for Lamonts Apparel, Inc; Y2k costs, low sales blamed

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Business Wednesday, January 5, 2000

Lamonts files for Chapter 11, again

The Associated Press

KIRKLAND -- Lamonts Apparel Inc., which operates 38 department stores in the Pacific Northwest, filed for Chapter 11 bankruptcy protection on Tuesday, its second such filing in five years.

The company said in a statement that its cash flow had been squeezed by slow spring and summer sales and unexpected costs associated with fixing its Y2K computer problems.

The company has a store at Westfield Shoppingtown Capital Mall and another store in Aberdeen.

Lamonts also announced that due to its filing, it had received a $45 million commitment for debt financing, pending court approval of its bankruptcy filing.

Spokeswoman Rivian Bell said the promised infusion of cash has already played well with the company's apparel vendors, which had stopped shipping clothes and other products to the company's stores last year.

"We're going to have a lot more cash available to us than we've had in the last five years," Bell said. "We'll even be able to go after additional sources of goods that our customers will appreciate."

In 1999, the department store chain reported losses of $4.5 million for the year on $209 million in revenue. Bell said this year's revenue, due to be officially released later this month, will look similar.

The company paid a combined $10 million to install new computerized registers and other hardware as part of its efforts to combat the Y2K bug.

Bell added that the company had to aggressively reduce prices on spring and summer apparel due to the Northwest's unusually chilly weather. That, in turn, meant less merchandise available for the holiday season, usually a moneymaker for most stores.

"We did not have enough revenue over the summer to purchase the merchandise we needed for the holidays," Bell said.

Source: The Olympian Online; Olympia, Washington

http://news.theolympian.com/stories/20000105/Business/23794.shtml

-- Lee Maloney (leemaloney@hotmail.com), February 09, 2000

Answers

Lee this is a great post

This is a classic example of what we thought a y2k failure would be: accounting and upgrade problems cause companies that were already teetering to fall off the edge, in this case to chapter 11.

I predict this will not be the last.

-- Bud Hamilton (budham@hotmail.com), February 09, 2000.


Thanks Bud. I thought it was a prime example too.

The bankruptcies seem to be increasing a bit, but companies won't mention Y2k until they finally reach that edge, as you say.

I see that a new gov't bill is in the works. It would curtail the number of bankruptcy filings or at least hold companies liable to pay off some or most of their debts. (Have to go back and reread that again)

-- Lee Maloney (leemaloney@hotmail.com), February 10, 2000.


Moderation questions? read the FAQ