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Mervyns Going Out Of Business

Mervyns was a department store chain begun in California. It carried national brands of clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares. Many of the company's stores were created in shopping malls; however some locations are operated independently. Based on 2005 revenue, Mervyns was the 83rd largest retailer in the United States.

In 2006, Mervyns had 189 stores in 10 states. One year later, Mervyns had reduced its store count to 177 stores in seven states. On October 17, 2008, the company announced that it would liquidate its assets through a Chapter 7 filing. All remaining locations were closed by the end of the year. The Morris family, having bought back intellectual property rights to the company in 2009, announced plans to relaunch Mervyns as an internet-based enterprise. The proposed revival never came to fruition.

History[]

Beginnings[]

Mervin G. Morris founded the first Mervyns store in San Lorenzo, California (a suburb of Oakland and San Francisco) on July 29, 1949. The store was supposed to be named Mervin's, but the architect suggested that a spelling with a y instead of an i would be more visually appealing. Mervyn's was located in the midst of San Lorenzo Village, a planned residential community nestled between the cities of Hayward and San Leandro, composed of two- and three-bedroom tract homes built between 1944 and the 1950s. Mervyns carved a niche for itself by having a relatively no-frills shopping environment that reduced overhead, enabling the store to price merchandise lower than competing department stores in the area. Mervyns also offered significantly-discounted factory seconds of basics such as jeans, t-shirts, underwear and similar garments, as well as household linens, with flaws minor and undetectable by most. During the 1950s and 1960s, this made Mervyns popular with the young suburban families comprising the majority of San Lorenzo's population. This marketing strategy was later abandoned before Mervyns expanded beyond its original single location, but Mervyns remained popular as a lower-priced alternative to national department store chains.

The second Mervyn's store opened about 15 miles (24 km) south as an anchor tenant of the Fremont Hub Shopping Center, one of two regional malls in Fremont, California in 1962.

Target years and expansion[]

In mid-1975, Mervyns operated stores in the following locations, all in California: Alameda, Antioch, Campbell, Citrus Heights, Cupertino, Daly City, Dublin, Fremont, Merced, Millbrae, Modesto, Mountain View, Napa, Oakland, Petaluma, Sacramento-Point West and Florin, Salinas, East San Jose and South San Jose, San Lorenzo, San Pablo, Vallejo and Visalia. In October 1975, the chain expanded to southern California, opening stores in Fullerton and Huntington Beach.

By 1978 the company had grown to a chain of more than 50 stores in three states, and Mervyns was acquired by the Dayton Hudson Corporation (now Target Corporation). Mervyns kept its separate identity as a Dayton Hudson subsidiary. The average store had 80-130 employees. There was a Store Team Leader (1), Executive Team Leaders (2-4), Department Leaders (7-10), benefited team members (full-time employees not part of the leadership team), and part-time employees. All employees had "credit goals", which referred to the number of customers that opened a Mervyns credit account. Part-time employees were expected 1 per every 8 hours, and the leadership team was expected 1 per every 40 hours.

When entering Florida with a store in Lakeland in 1986, Mervyns began major expansions outside of California with Atlanta being the site of a particularly strong expansion campaign, followed by Miami in 1991. Mervyns, which had not previously had a retail presence in the southern U.S. competed for mall space with JCPenney which later received top anchor spots at the Town Center Mall in Kennesaw, Shannon Mall in Union City (rebuilt as a DHL Distribution Center), and Gwinnett Place Mall in Duluth (now Beauty Master). Stores that were unaffected were those at North Dekalb Mall in Decatur that was taken over by Upton's (Burlington Coat Factory now occupies the store) and North Point Mall in Alpharetta, which became Parisian and was rebuilt as AMC Theatres. This was also likewise done at the same time in Florida where the company sold ten stores to Dillard's which opened at Cutler Ridge Mall in Cutler Ridge (rebuilt as Regal Cinemas), Miami International Mall in Doral, Coral Square in Coral Springs (both are now Kohl's stores just like many of the other former Mervyns stores today), Boynton Beach Mall in Boynton Beach (Dillard's converted the store into a clearance center using only half of the building), Broward Mall in Plantation, Pembroke Lakes Mall in Pembroke Pines, Melbourne Square in Melbourne, and Lakeland Square Mall in Lakeland (rebuilt as Cinemark and Sports Authority, which closed in 2016), the latter three locations became "double headers" for Dillard's. The locations at Treasure Coast Square in Jensen Beach (demolished for Borders, which closed in 2011 and became H. H. Gregg that closed in 2017) and Pompano Fashion Square in Pompano Beach (rebuilt as Lowe's) did not become Dillard's when being sold to the Little Rock retailer while some stores that weren't included in the deal were sold to other retailers, such as a larger Saks Fifth Avenue taking over an empty store at Town Center Mall in Boca Raton, where Dillard's wanted to open a new store there since its closure in 1995. Mervyn's had withdrawn from both Miami and Atlanta in 1997. During the 1990s, Mervyn's also expanded into Arizona, Colorado, Texas, Michigan, Minnesota, and Washington State.

Mervyn's California; Sale from Target[]

From 1995 to 2001, the stores were rebranded as Mervyns California, in an effort to identify with its West Coast roots. A media campaign was launched to publicize the rebranding, with TV commercials and catalogs featuring former San Francisco 49ers' quarterback Joe Montana. The rebranding had little effect on the company's revenues, and the "California" was dropped from the name in 2001, reverting to the original name. The majority of their stores in Texas didn't even consider adding the "California" name to their stores.

In March 2004, Target Corporation announced that they planned to put the Mervyn's and Marshall Field's divisions up for sale to focus on Target stores. Target Corporation was approached by many buyers for both stores but many of the potential buyers saw value only in the real estate. Target refused to sell to the groups which wanted to buy the property only, and said they would only look at deals that would not close the company and put the then 30,000 employees out of work. In July 2004, Target Corporation announced that Mervyn's had been sold to a group of investors that included private investment firm and turnaround specialist Sun Capital Partners, Cerberus Capital Management, and real estate investment company Lubert-Adler Management Inc. Rick Leto was named the new president and chief merchandising officer in January 2005.

Store closures prior to bankruptcy[]

One of the first acts of the new owners was to cease store operations in certain states, with stores in Minnesota being the first to close. Locations in Minnesota were much larger than the normal store of about 80,000 sq ft (7,400 m2); a few had restaurants. The size of these stores, and their proximity to Target Corporation, made the new owners think them unnecessary.

Further store closures were announced in September 2005, as Mervyns announced that it would begin to focus exclusively on its Western and Southwestern United States markets, and those 62 stores in the Midwest and South would be closed. Prior to the formal announcement, store employees saw weekly shipments shrink and delivery schedules went from 3 days per week to one. Mervyns stores in Michigan, Oklahoma, and Louisiana were the first to close, in February 2006. 28 stores in Texas, as well as one store in Salt Lake City, Utah, were also closed.

In 2007, an additional 18 stores were closed. Of the stores closed, 17 were in Oregon and Washington, and one in Grand Junction, Colorado, which was the last remaining Mervyns store in that state.

Bankruptcy and store closures[]

Mervyn's bankruptcy prompted the company to liquidate remaining store merchandise through dramatic clearance sales in late 2008.

Signs of financial distress and possible bankruptcy surfaced on July 21, 2008, when the Associated Press reported that Mervyns had stopped updating its financial status and that the department store's vendors ceased shipping some products, hurting the store's back-to-school season sales efforts. In addition, financing requests were denied by lenders. This raised the possibility of the company having to file for Chapter 11 bankruptcy, or going out of business altogether.

The company made no official comments at the time, but on July 29, 2008, Mervyns announced that it had filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of California. Soon, the Chapter 11 case was converted to Chapter 7 liquidation on October 17, 2008. At the time of this announcement 3 stores had just held grand openings only a few months prior to being told they would soon close.

Although the company initially vowed to keep all locations open during the reorganization efforts, the company announced in August 2008 the closure of all 26 underperforming stores. The company hired an outside company to assist in the liquidation of assets from the stores affected. The closures also marked a complete retreat by Mervyns from the Idaho market, whose sole store in Boise was one of the ones marked for closure. In Texas, a complete retreat was slated from San Antonio, where all three remaining stores were marked for closure, in addition to the closure of the sole stores in Lubbock, Midland, and Odessa.

After these closures, Mervyns was left with about 150 stores: 16 in Arizona, 121 in California, three each in Nevada and New Mexico, seven in Texas and six in Utah.

In September 2008, Mervyns sued the private equity firms involved in the leveraged buyout of the chain, alleging that the deal had stripped the retailer of its real estate assets, forcing it into bankruptcy. Mervyns said in the suit that Cerberus Capital Management and its partners had used the increased rent to finance the buyout.

Liquidation[]

Although the company attempted to undergo reorganization under bankruptcy, Mervyns ultimately succumbed to the ongoing US recession and announced that it would liquidate its assets through Chapter 7 of Title 11 in the United States Code, stating it "is the best course of action to maximize value for all of the company’s creditors, employees and other stakeholders." The bankruptcy called for the company to liquidate and close its remaining stores The announcement came amidst an offer by fashion retailer Forever 21 to purchase 149 of the remaining Mervyns stores for an undisclosed amount. The original negotiations failed, and Mervyns liquidated all 149 stores under the bankruptcy action. Several months later, department store retailer Kohl's and Forever 21 prevailed in a joint bid at bankruptcy auction to take over the leases of 46 Mervyns stores; Kohl's has assumed 31 stores, while Forever 21 has assumed 15 stores.

In a KPIX-TV interview on February 11, 2009, Mervin Morris' son Jeff revealed that the family had bought the Mervyns name and intellectual property, including the company's customer list as part of an effort to relaunch the company. Morris did not say when the website would launch or how much it would cost, only that decisions will be up to his sons. Since 2009, the Mervyns website has been replaced with a single-page site that allows visitors to sign-up for a mailing list to receive updates about the future of Mervyns, but was shut down. The website is no longer accessible.

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