Gottschalks’ return now set for spring
Tim Sheehan / The Modesto Bee
FRESNO — Plans to resurrect the Gottschalks retail brand with a new department-store chain are being pushed back until next spring instead of the Nov. 1 opening promised earlier this year.
Veteran retailer Joe Levy, chairman of the new Gottschalk by Joe Levy, said a still-shaky economy has made it tough to get financing.
Levy and his management team also said they were naive about how quickly the company could get up and running from scratch.
The delay means the new firm will miss the lucrative holiday shopping season that can account for half or more of apparel retailers’ annual profits, experts say.
“We’re certainly sorry to miss that, but it will probably give us sort of a breathing spell to balance our merchandise to see what sells best,” Levy said. “November 2010 was a really tight push.”
Levy now plans to open three or four stores in the spring of 2011. He said he’s in negotiations with shopping-center owners in Clovis, Oak-hurst, and Auburn and in Carson City, Nev.
There are no plans to reopen the Modesto Gottschalks store in Century Center.
Levy wants to revive the retail brand established in 1904 by his great-uncle, Emil Gottschalk, with a dry-goods store in downtown Fresno. Gottschalks Inc. grew to dozens of stores across the western United States until it went bankrupt last year. Levy served for years as the chain’s president, chairman and CEO, but had given up day-to-day control several years before the company collapsed.
In April, when Levy announced his effort, he said the company had lined up much of the investment capital needed for the start-up.
“But in this economy, it’s a very fluid financial situation,” said Robert Lawson, Levy’s chief financial officer. Because of a series of poor reports on consumer confidence and California’s retail economy, Lawson said, “people changed their minds and thought maybe this wasn’t such a good investment.”
Levy and Lawson said they are now negotiating with several new investor groups. “We’re quite confident that we’ll have this thing financed,” Lawson said.
Levy, Lawson and CEO Robert Wiser declined to say how much they need for a successful launch.
Industry experts say the delay doesn’t necessarily mean Levy’s plans are in trouble, but indicates the hard times in which the Levy team is trying to find investors.
Experts: Wait makes sense
“It’s understandable in this economic environment,” said retail consultant James Tenser, head of VSN Strategies in Tucson, Ariz.
“Banks are reluctant to lend. And many private investors are still inclined to sit on their assets.” Because of the recession’s lingering effects, U.S. department-store start-ups are rare, he said.
“But Mr. Levy may be a unique case,” he added. “You’ve got a real veteran who’s taking a brand with considerable equity and trying to return it to the marketplace.”
One thing in Levy’s favor is that many shopping centers are reeling from retail closures and are more likely to deal with large tenants. “The logic out there is that some rent is better than no rent,” Tenser said.
Missing the holiday shopping season, while a lost opportunity, isn’t a deal-breaker, Tenser said.
“At the end of the day, you don’t start before you’re truly ready,” he said. “And when you’re ready, you don’t hesitate.”
Another analyst said an extra six months or so may actually work in Levy’s favor.
“I’d wonder if another reason (Levy) is delaying the store openings is a sense that consumer confidence is continuing to fall,” said Jeff Green, head of Phoenix-based Jeff Green Partners. “Maybe he wants to ride out the recession a little bit longer before opening a new chain in the depths of all this.”
Levy said he would have preferred to have opened in November.
“I think the initial push in areas where we’re well known would have compensated for that lack of consumer confidence,” he said. “People would have looked in the stores, and if they like what they saw, they would have bought.”
With the pressure off, “we’ll be able to evaluate our merchandise mix, organize our charge cards and get other things going well,” Levy said.
“The extra time is definitely a blessing, I’m positive, even though we would liked to see it happen sooner,” he added.