Fortunoff files for Chapter 11 bankruptcy
By Caroline Humer
NEW YORK (Reuters) - U.S. regional luxury retailer Fortunoff filed for Chapter 11 bankruptcy protection on Thursday and said it will try to sell the business, but if it cannot it will close its doors.
The company, which sells jewelry, dinnerware and furniture in New York, New Jersey, Pennsylvania and Connecticut, began suffering a "severe liquidity crisis" in January as it was trying to sell the company, according to court documents.
Dismal sales over the 2008 holiday season, weak consumer spending on high-end furniture and jewelry, the costs of expanding its jewelry line in Lord & Taylor stores and reduced borrowing capacity all hurt operations, it said.
Fortunoff had net operating losses of $42 million on revenue of $260 million during the nine months ending November 30.
Fortunoff is owned by NRDC Equity Partners, a private equity firm that bought the retailer last year after it previously filed for bankruptcy. At the time, NRDC's Chief Executive Richard Baker, the son of retail landlord Robert Baker, said he planned to invest $100 million in the Fortunoff business.
In the heady peak before the U.S. recession, NRDC ventured into retail investments. With partner Apollo Management LP, NRDC bought now-bankrupt Linens 'n Things for $1.2 billion, and made solo purchases of department-store chain Lord & Taylor for $1.2 billion, and Hudson's Bay, one of Canada's largest retailers, for about $1.1 billion.
Now, bankrupt Linens 'n Things is liquidating its stores and Lord & Taylor has been merged into Hudson's Bay to streamline and cut costs, media reports said.
Hudson's Bay said on Wednesday it would cut 1,000 jobs, or about 5 percent of its full-time workforce. Baker also had to pull funding from Peter Som, a fashion designer he had helped bankroll, according to media reports. Continued...