Goody’s going out of business

Published 8:26 pm Wednesday, January 7, 2009

Kendra Majors

Family clothing retailer Goody’s Family Clothing is set to begin liquidating its remaining stores Friday, making it the first high profile to fail in 2009.

Goody’s has 280 stores, 30 in Alabama and one in Troy.

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The move, which comes less than four months after the privately held retailer emerged from Chapter 11 bankruptcy protection, affects the Knoxville, Tenn.-based chain’s 287 stores scattered throughout 20 Midwestern and Southern states, Cathy Hershcopf, a partner at Cooley Godward Kronish LLP told the Associated Press.

It’s uncertain what will happen to the company’s 9,800 workers after the liquidation is completed by the end of March.

But without a last minute buyer or an investor to purchase high-performing stores, their job outlook is grim.

“I think every retailer experienced a great deal of pressure this holiday season because of the lack of consumer confidence,” Hershcopf said. “But undercapitalized companies like Goody’s experienced more pressure from their lenders and from their vendors.”

Goody’s filed for bankruptcy protection in June, saying at the time that the move would help it address “pressures from tightening credit markets, strain on merchandise flow and a sizable but isolated number of underperforming stores in the chain.”

The company launched a reorganization plan; closed and liquidated dozen of underperforming stores shuttered an Arkansas distribution center and a New York corporate office.

It also suspended its e-commerce business and an associated distribution center in its home state of Tennessee.

With the holiday shopping decrease this year, the reorganization plan was not enough to keep the company in business.

The nearly 60-year-old retailer has now been forced to seek bankruptcy protection for a second time.

Company executives are also speaking with Goody’s competitors to gauge interest in who may want to purchase some of the chain’s stores.