CHICAGO, Dec. 28 -- Sixteen months after emerging from Chapter 11 bankruptcy, 128-year-old retailer Montgomery Ward & Co. Inc. announced Thursday it will close its 250 stores in 30 states and cease operations next year.
The liquidation under Chapter 11 of the federal bankruptcy code will cost 37,315 jobs nationally, including 2,000 in the Chicago area.
Wards immediately laid-off 450 people at its national headquarters as it began the process of shutting down. The company said it would close its 250 stores and 10 distribution centers in 30 states during the first and second quarters of 2001.
"Today's filing comes after an exhaustive exploration of options for continuing the business," Chairman and CEO Roger Goddu said in a statement. "Overall weak holiday sales and a very difficult retail environment simply did not permit us to complete the turnaround that might have been possible in an otherwise thriving economy. Sadly, today's action is unavoidable."
News the company was going out of business began to leak when WBBM-AM reported Wards was refusing to accept deliveries from suppliers at its distribution centers around the country. Teary-eyed employees were seen carrying packing boxes and personal belongings from the corporate headquarters building and said they were told the retailer was "winding down" and would close its doors for good.
Workers were expected to receive modest severance packages but no extended health benefits after Dec. 30.
"I had an idea they were going to close up eventually," Gwen Washington, an employee for 13 years told WFLD-TV.
The folding of Wards was a blow to Chicago, which has lost the corporate headquarters of Ameritech, First Chicago and Amoco to mergers and acquisitions over the last few years.
Wards began as the nation's first general-merchandise, mail-order catalog in 1872 when Aaron Montgomery Ward and his brother-in-law put out a one-sheet price list with ordering instructions. By 1904, the Montgomery Ward Company was mailing out three million catalogs.
The company abandoned the historic catalog but the department store chain's 1907 Mail Order Building on Chicago Ave. is listed as a national historic landmark. Wards opened its first retail store in Plymouth, Ind., in 1926 and introduced Rudolph the Red-Nosed Reindeer during Christmas 1939.
Wards filed for bankruptcy in July 1997, but reorganized with a $100 million loan from GE Capital, and was attempting a turnaround. Wards redesigned and overhauled stores to upgrade apparel lines and present a new modern image.
GE Capital, Wards' majority shareholder, acquired The Signature Group, the direct marketing arm of Wards as part of the bailout.
The privately-held department store chain emerged from Chapter 11 in August 1999 after closing more than 100 under performing stores -- including specialty stores Lachmere, Home Image by Lachmere and Electric Avenue.
With 250 stores in 30 states, Wards was attempting the difficult task of targeting a niche market of 30-to-55 year-old women and 26-to-65 year-old men, somewhere between Sears and Penny's and Target and Wal-Mart.
The revamped prototype stores attracted shoppers and outperformed older Wards stores but Christmas sales company-wide were disappointing.
Wards lost $1.16 billion in 1997 on $5.37 billion in sales but cut its losses dramatically in 1998, earning $585 million from continuing operations compared to 1997. Wards had revenues of $3.2 billion in 1999.
