Our business strategy is quite simple. We fill our stores with a wide assortment of designer, department, discount and specialty store deals at prices substantially lower than competing department and discount stores. We use our buying expertise to drive down prices and then pass the savings on to you, the customer. You never know what you’ll find at Value City! – Value City Mission Statement
Apparently what you’ll find on your next trip to Value City is a big closed sign. It is surprising to see the brand names I recognize going out of business. Now Value City is closing it’s doors. What I was really surprised to see was the stake that DSW had in Value City.
Value City Department Stores has filed for Chapter 11 bankruptcy and will liquidate its remaining 66 stores, citing a slide in consumer spending and tougher credit markets.
An economic downturn, higher gasoline prices and increasing unemployment have decimated the discount department store chain’s core market, according to documents filed with a New York bankruptcy court on Sunday.
The company’s suppliers have also tightened credit terms, making it impossible to stock its shelves with enough new merchandise to remain profitable, according to the filing in the U.S. Bankruptcy Court for the Southern District.
Value City first opened in Columbus, Ohio, in 1917. It is known for selling apparel, shoes, home goods and electronics at discounted prices, in competition with chains such as TJX Companies Inc’s TJ Maxx and Big Lots.
The company has asked the court to approve an agreement with liquidator and financial consultant Tiger Capital to hold going-out-of-business sales at substantially all of the remaining stores. Though the company contacted four other liquidators after receiving a proposal from Tiger, none submitted a competitive offer.
The company has asked the court to approve a $40 million debtor-in-possession credit agreement with National City Business Credit Inc and Wells Fargo Retail Finance LLC, saying the funds are needed to conduct the going-out-of-business sales in an orderly manner.
Shoe retailer DSW Inc is the largest unsecured creditor, with about $4.5 million in claims, according to court documents. The claim is being disputed.
Retail Ventures Inc, the owner of the DSW Shoes and Filenes Basement holds a 19 percent stake in Value City.
The filings follow a series of restructuring efforts and layoffs aimed at keeping the business afloat. It has closed more than 75 stores since December 2007.
From February to August of this year, the company had a net loss of $70 million on $288.5 million in sales.
As of Oct. 15, the company employed some 4,500 people and operated 66 stores in states including Delaware, Pennsylvania and Tennessee, according to court documents.