LOS ANGELES -- Southern California department store chain Buffums, as had been widely expected, said Thursday it will close its 16 stores in May because the recession has made it unprofitable to operate.
Buffums, one of the region's oldest retailers, said the shutdown will eliminate the jobs of about 1,100 full-time employees and 300 part-time workers.
'Despite the tremendous efforts that have been made during the last several months to turn our business around, we have been unsuccessful in creating a profitable operation,' said Buffums President John Duncan in a letter to employees. 'This, coupled with the current economic recession, has brought us to the conclusion that Buffums can no longer continue to operate.'
Industry estimates placed Buffums' losses at $4.2 million on sales of $110 million for the fiscal year ended last June 30.
The announcement was not a surprise following reports in recent weeks that the chain's owner, Adelaide Steamship Co. of Australia, had been unable to find a buyer. Adelaide Steamship, which also operates the David Jones Ltd. department store chain in Australia and the Australian discount-food store chain Woolworths Ltd., has been under pressure from its lenders to reduce its $7 billion debt load.
Reports also emerged that Buffums had hired bankruptcy attorneys to draft a liquidation plan. A Buffums spokesman said Thursday that no decision has yet been made on whether the to file for bankruptcy protection.
Analysts have said Buffums had not responded well to increased competition in the retail environment that has focused on specialty stores, discounters and service-oriented outlets. The stores had not been remodeled for many years and tended to cater to elderly customers.
'Buffums did not keep up with the trends at all,' said Douglas Christopher, a retail analyst with Los Angeles brokerage Crowell Weedon & Co. 'It had no clear image, compared with Nordstrom, The Limited or May Co.'
Christopher said the souring economy is also partly to blame. 'The recession is a factor because it tends to weed out marginal players like Buffums,' he said.
Buffums' decision to close down comes a month after another Southern California department store chain, Carter Hawley Hale Stores Inc., filed for Chapter 11 bankruptcy protection, listing $1.2 billion in debts. Carter Hawley's troubles stemmed from a failure to upgrade its stores and a huge debt load from fending off a 1987 takeover attempt.
Buffums plans to close its stores Monday and Tuesday to prepare for liqudiation sales.
Some potential buyers for the stores could include Dillards Department Stores Inc., of Little Rock, Ark. and Gottschalks Inc., of Fresno, Calif.
The chain was founded in 1904 in Long Beach and operates two stores and its headquarters in that city. It also has stores in Arcadia, Glendale, Grossmont, La Canada, Laguna Hills, Lakewood, Lomas Santa Fe, Manhattan Beach, Newport Beach, Palm Springs, Palos Verdes, Pomona, San Diego and Westminister.