Bradlees Files for Bankruptcy Protection
BOSTON (AP) _ Bradlees Inc. filed for bankruptcy protection from its creditors Friday, and also announced a shakeup in top management.
The discount department store chain said its 136 stores will remain open and employees will continue to receive wages and benefits as the company reorganizes with a $250 million line of credit from Chemical Bank.
Bradlees filed for Chapter 11 protection ``in order to restore normal merchandise delivery and the confidence of our vendors that they will be paid for all new shipments,″ said Mark A. Cohen, chairman and chief executive officer.
``While we would have preferred to refinance the company in a conventional manner ... we view this filing as our only alternative, given the lack of merchandise support we are now witnessing,″ he said.
Chemical Bank agreed to provide Bradlees with debtor-in-possession financing, subject to court approval, the company said.
Bradlees, which has faced strong competition from Caldor, said it would focus on rebuilding its reputation for an excellent selection of reasonably priced clothing.
The company also will try to bring in name-brand labels with higher profit margins, while still offering discounts to customers, officials at the Braintree, Mass.,-based company said.
Lee F. Backus, an analyst at Buckingham Research in New York, said he thought Bradlees could reorganize successfully under Cohen and Peter Thorner, who was named president and chief operating officer Friday.
``They’re people who can shake things up and have a good effect,″ Backus said.
Bradlees will have a struggle, however, because of the proliferation of discount chains _ especially Wal-Mart, which is making strong inroads in the Northeastern states where Bradlees has its stores, Backus said.
``Their operating expense levels are significantly higher than Wal-Mart,″ he said. ``Wal-Mart is also improving its apparel, which is how Bradlees distinguished itself.″
Cohen, who only took over as top executive last December, said Friday that Thorner would replace Samuel W. W. Mandell, who had resigned.
Thorner, who joined Bradlees in March as vice chairman for finance, distribution, information systems and loss prevention, previously was president and chief operating office of Ames Department Stores.
The company also announced the resignations of Anne B. Terhune, vice president and general counsel, and Barry Horwitz, vice president for marketing. Those positions have not yet been filled, said spokeswoman Aileen Gorman.