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Some of the retailers that analysts say they are watching carefully are struggling regional department store Bon-Ton Stores Inc., of York, Pa., and apparel retailer Goody's Family Clothing Inc., which filed for bankruptcy protection in June but emerged from Chapter 11 in October. Officials from Bon-Ton and Goody's did not immediately return calls seeking comment. This week Parent Co., the operator of etoys.com, filed for Chapter 11 bankruptcy protection and said it will consider selling some or all of its operations. Chris Byrne, a New York-based toy consultant, said that etoys.com couldn't compete with the aggressive tactics embraced by Toys R Us and Wal-Mart Stores Inc., the nation's top two toy sellers. Retailers who do file for bankruptcy are also under more pressure now than in the past because of 2005 changes to the code that cut down the amount of time they have to file a complete reorganization plan, said Ken Simon, managing partner at Loughlin Meghji + Co., a restructuring advisory firm. Another big problem for them, Simon said, will be securing additional financing to keep operating because of the tight credit markets. The dire problems facing retailers also spell bigger problems for suppliers, which have already been seeing merchants cut or cancel orders. Allan Ellinger, senior managing partner at New York-based MMG, an investment banking and strategic advisory practice, foresees a shakeout in the apparel industry and said those who survive are going to have a hard time meeting the financial needs of stores. He estimated that apparel companies have slashed their 2009 spring inventory by 20 percent to 25 percent from a year ago, because they would rather be reacting to hot sellers than be stuck with too much merchandise. "You have to go into deep survival mode," Ellinger added.
[Associated
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