Mervyns
Encyclopedia
Mervyns was an American middle scale department store
chain based in Hayward, California
. It carried national brands of clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares. Many of the company's stores were in shopping mall
s. Based on 2005 revenue, Mervyns was the eighty-third largest retailer in the United States
.
In December 2006, Mervyns had 189 stores in 10 states. Mervyns closed all of their locations in Oregon
and Washington by February 2007, reducing its store count to 177 stores in 7 states. The company said it closed underperforming locations that did not contribute to the company's success. In July 2008, Mervyns announced it filed for Chapter 11 bankruptcy protection. Three months later (October 17, 2008), the company announced that it would liquidate its assets through a Chapter 7 filing. On October 31, 2008, Mervyn's began the process of liquidating its entire inventory in an effort to repay its creditors, and by December 31, 2008, all remaining locations were closed. Then, on February 11, 2009, the Morris family announced that they had bought back intellectual property as well as naming rights to the company, their hope being to relaunch as an internet-based enterprise.
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. Mervyn's 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. Mervyn's also offered basics, such as jeans
, t-shirt
s, underwear and similar garments, as well as household linens, that were deemed "seconds" by the manufacturers, with their flaws minor and undetectable by most, at significantly reduced prices. During the 1950s and 1960s, this made Mervyn's popular with the young families comprising the majority of San Lorenzo's population. This marketing strategy was later abandoned before Mervyn's expanded beyond its original single location, but Mervyn's remained popular as a lower-priced alternative to national department store chains.
The second Mervyn's store opened about 15 miles (24.1 km) south as an anchor tenant of the Fremont Hub Shopping Center, one of two regional malls in Fremont, California
in 1962.
In 1978, by which time the company had grown to a chain of more than 50 stores in three states, Mervyn's was acquired by the Dayton Hudson Corporation (now Target Corporation
). Mervyns kept its separate identity as a Dayton Hudson subsidiary.
In 1986, Mervyn's made major expansions into the southeastern United States
, with Atlanta being the site of a particularly strong expansion campaign. Mervyns, which had not previously had a retail presence in Georgia
, competed for mall space with J.C. Penney
and received top anchor spots at several area malls, such as the Town Center Mall, Shannon Mall, North DeKalb Mall
, Gwinnett Place Mall
and North Point Mall
.
The foray into Atlanta was a failure, and Mervyns withdrew from Atlanta by 1997. Its former locations were acquired by other department stores.
Mervyn's also ventured into Florida
during this time. This also ended in failure, with Mervyn's closing all of its Florida stores in 1998.
From 1996 to 2001, the stores were rebranded as Mervyn's 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. There were also issues with owners of Mervyn's stores outside California with the branding.
Presidents during the Mervyn's California period included Paul Sauser, Bart Butzer and Diane Neal.
The size and layout is close replica of a Kohl's store with the exception of having cash registers within each department (a few stores had central checkouts like Kohl's) The average store had 80-130 employees. There was a Store Team Leader (1), Executive Team Leader (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 (selling the Mervyn's credit card) part time employees were expected 1 per every 8 hours, and the leadership team was expected 1 per every 40 hours.
sold Mervyn's to a group of investors that included private investment firm and turnaround specialist Sun Capital Partners, Inc
, 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.
On the store level they saw few changes except to "de-target" the entire building. All bullseye logos got covered with Mervyn's stickers. The labor intensive markdown process was changed to a direct knock off of Kohl's process. The common Target language got a makeover as well as the job titles were changed to a much more traditional retail lingo;
Store team leaders (STL) became Store Manager,
Executive Team Leaders (ETL) became Assistant Manager,
Department Leaders (DL) became Department Managers and then changes again to Department Supervisors.
In June 2006, Mervyns implemented the MARS (Mervyns Advanced Retail Systems) systems, which replaced the old Target-based cash register
systems. The new program streamlined cash register functions, in addition to integrating store merchandise distribution
, logistics
, and personnel management functions. The majority of these system came from JDA Software Inc. in Scottsdale, Arizona. JDA was successful in converting all current "Target" systems" to Mervyns systems in under 12 months.
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 80000 sq ft (7,432.2 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 Mervyn's announced that it would begin to focus exclusively on its Western
and Southwestern U.S.
markets, and that 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. Mervyn's 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.
reported that Mervyn's 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, Mervyn's announced that it had filed for Chapter 11 bankruptcy protection. 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.
and retail businesses. In essence, the Mervyns real estate arm charged retailer Mervyns huge rents for its department store space.
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.
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.
As of May 2010 Kohl's had acquired more than 80 of the shuttered Mervyn's locations. With the downturn in the restate market, Kohl's has taken over these locations sometimes at half the rent Mervyn's was paying.
and announced that it would liquidate its assets through Chapter 7 of the United States Bankruptcy 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 Mervyn's 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. Kohls has indicated it might take over more former Mervyns locations in the future.
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.
On February 18, 2009, the Mervyns website (Mervyns.com) was replaced with a single-page site that allows visitors to sign-up for a mailing list to receive updates about the future of Mervyns.
For a brief period in July 2011, Mervyns.com redirected to a Yesmail Enterprise
login page. The site has since been restored to the Mervyns mailing list sign-up page, as described above.
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
chain based in Hayward, California
Hayward, California
Hayward is a city located in the East Bay in Alameda County, California. With a population of 144,186, Hayward is the sixth largest city in the San Francisco Bay Area and the third largest in Alameda County. Hayward was ranked as the 37th most populous municipality in California. It is included in...
. It carried national brands of clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares. Many of the company's stores were in shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s. Based on 2005 revenue, Mervyns was the eighty-third largest retailer in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
In December 2006, Mervyns had 189 stores in 10 states. Mervyns closed all of their locations in Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
and Washington by February 2007, reducing its store count to 177 stores in 7 states. The company said it closed underperforming locations that did not contribute to the company's success. In July 2008, Mervyns announced it filed for Chapter 11 bankruptcy protection. Three months later (October 17, 2008), the company announced that it would liquidate its assets through a Chapter 7 filing. On October 31, 2008, Mervyn's began the process of liquidating its entire inventory in an effort to repay its creditors, and by December 31, 2008, all remaining locations were closed. Then, on February 11, 2009, the Morris family announced that they had bought back intellectual property as well as naming rights to the company, their hope being to relaunch as an internet-based enterprise.
History
Beginnings
Mervin G. Morris founded the first Mervyns store in San Lorenzo, CaliforniaSan Lorenzo, California
San Lorenzo , also known as San Lorenzo Village is a census-designated place in Alameda County, California, United States. The population was 23,452 at the 2010 census.-Geography:...
on July 29, 1949. The store was supposed to be named Mervin's, but the architect
Architect
An architect is a person trained in the planning, design and oversight of the construction of buildings. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the...
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. Mervyn's carved a niche for itself by having a relatively no-frills shopping environment that reduced overhead
Overhead (business)
In business, overhead or overhead expense refers to an ongoing expense of operating a business...
, enabling the store to price merchandise lower than competing department stores in the area. Mervyn's also offered basics, such as jeans
Jeans
Jeans are trousers made from denim. Some of the earliest American blue jeans were made by Jacob Davis, Calvin Rogers, and Levi Strauss in 1873. Starting in the 1950s, jeans, originally designed for cowboys, became popular among teenagers. Historic brands include Levi's, Lee, and Wrangler...
, t-shirt
T-shirt
A T-shirt is a style of shirt. A T-shirt is buttonless and collarless, with short sleeves and frequently a round neck line....
s, underwear and similar garments, as well as household linens, that were deemed "seconds" by the manufacturers, with their flaws minor and undetectable by most, at significantly reduced prices. During the 1950s and 1960s, this made Mervyn's popular with the young families comprising the majority of San Lorenzo's population. This marketing strategy was later abandoned before Mervyn's expanded beyond its original single location, but Mervyn's remained popular as a lower-priced alternative to national department store chains.
The second Mervyn's store opened about 15 miles (24.1 km) south as an anchor tenant of the Fremont Hub Shopping Center, one of two regional malls in Fremont, California
Fremont, California
Fremont is a city in Alameda County, California. It was incorporated on January 23, 1956, from the merger of five smaller communities: Centerville, Niles, Irvington, Mission San Jose, and Warm Springs...
in 1962.
Target years, expansion
In mid-1975, Mervyn's 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.In 1978, by which time the company had grown to a chain of more than 50 stores in three states, Mervyn's was acquired by the Dayton Hudson Corporation (now Target Corporation
Target Corporation
Target Corporation, doing business as Target, is an American retailing company headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Walmart. The company is ranked at number 33 on the Fortune 500 and is a component of the Standard & Poor's...
). Mervyns kept its separate identity as a Dayton Hudson subsidiary.
In 1986, Mervyn's made major expansions into the southeastern United States
Southeastern United States
The Southeastern United States, colloquially referred to as the Southeast, is the eastern portion of the Southern United States. It is one of the most populous regions in the United States of America....
, with Atlanta being the site of a particularly strong expansion campaign. Mervyns, which had not previously had a retail presence in Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, competed for mall space with J.C. Penney
J.C. Penney
J. C. Penney Company, Inc. is a chain of American mid-range department stores based in Plano, Texas, a suburb north of Dallas. The company operates 1,107 department stores in all 50 U.S. states and Puerto Rico. JCPenney also operates catalog sales merchant offices nationwide in many...
and received top anchor spots at several area malls, such as the Town Center Mall, Shannon Mall, North DeKalb Mall
North Dekalb Mall
North Dekalb Mall is an enclosed shopping mall located in Decatur, a suburb of Atlanta, Georgia, United States. Opened in 1965, the center currently comprises more than eighty-five stores on one level...
, Gwinnett Place Mall
Gwinnett Place Mall
Gwinnett Place Mall is a super-regional shopping center located in Duluth, Georgia, in Gwinnett County. For the first 16 years, Gwinnett Place was the leading mall in the region, drawing shoppers from as far away as South Carolina and centering what was then one of the fastest growing counties in...
and North Point Mall
North Point Mall
North Point Mall, is a super-regional shopping mall, located in Alpharetta, Georgia .The mall opened on October 3, 1993 as one of the largest shopping malls in the country. The mall, originally a Homart property, is now owned and managed by General Growth Properties...
.
The foray into Atlanta was a failure, and Mervyns withdrew from Atlanta by 1997. Its former locations were acquired by other department stores.
Mervyn's also ventured into Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
during this time. This also ended in failure, with Mervyn's closing all of its Florida stores in 1998.
Mervyn's California
San Francisco 49ers
The San Francisco 49ers are a professional American football team based in San Francisco, California, playing in the West Division of the National Football Conference in the National Football League . The team was founded in 1946 as a charter member of the All-America Football Conference and...
' quarterback
Quarterback
Quarterback is a position in American and Canadian football. Quarterbacks are members of the offensive team and line up directly behind the offensive line...
Joe Montana
Joe Montana
Joseph Clifford "Joe" Montana, Jr. , nicknamed Joe Cool, Golden Joe, The Golden Great and Comeback Joe, is a retired American football player. Montana started his NFL career in 1979 with the San Francisco 49ers, where he played quarterback for the next 14 seasons...
.
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. There were also issues with owners of Mervyn's stores outside California with the branding.
Presidents during the Mervyn's California period included Paul Sauser, Bart Butzer and Diane Neal.
The size and layout is close replica of a Kohl's store with the exception of having cash registers within each department (a few stores had central checkouts like Kohl's) The average store had 80-130 employees. There was a Store Team Leader (1), Executive Team Leader (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 (selling the Mervyn's credit card) part time employees were expected 1 per every 8 hours, and the leadership team was expected 1 per every 40 hours.
Sale from Target
In July 2004, Target CorporationTarget Corporation
Target Corporation, doing business as Target, is an American retailing company headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Walmart. The company is ranked at number 33 on the Fortune 500 and is a component of the Standard & Poor's...
sold Mervyn's to a group of investors that included private investment firm and turnaround specialist Sun Capital Partners, Inc
Sun Capital Partners, Inc
Sun Capital Partners, Inc., is a private investment firm focused on leveraged buyouts, equity, debt, and other investments in market-leading companies. Sun Capital has invested in more than 275 companies worldwide with combined sales in excess of $40 billion since Sun Capital’s inception in 1995...
, Cerberus Capital Management
Cerberus Capital Management
Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by -year-old financier Steve Feinberg. Former U.S...
, and real estate investment company Lubert-Adler Management Inc. Rick Leto was named the new president and chief merchandising officer in January 2005.
On the store level they saw few changes except to "de-target" the entire building. All bullseye logos got covered with Mervyn's stickers. The labor intensive markdown process was changed to a direct knock off of Kohl's process. The common Target language got a makeover as well as the job titles were changed to a much more traditional retail lingo;
Store team leaders (STL) became Store Manager,
Executive Team Leaders (ETL) became Assistant Manager,
Department Leaders (DL) became Department Managers and then changes again to Department Supervisors.
In June 2006, Mervyns implemented the MARS (Mervyns Advanced Retail Systems) systems, which replaced the old Target-based cash register
Cash register
A cash register or till is a mechanical or electronic device for calculating and recording sales transactions, and an attached cash drawer for storing cash...
systems. The new program streamlined cash register functions, in addition to integrating store merchandise distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
, logistics
Logistics
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
, and personnel management functions. The majority of these system came from JDA Software Inc. in Scottsdale, Arizona. JDA was successful in converting all current "Target" systems" to Mervyns systems in under 12 months.
Store closures prior to bankruptcy
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
being the first to close. Locations in Minnesota were much larger than the normal store of about 80000 sq ft (7,432.2 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 Mervyn's announced that it would begin to focus exclusively on its Western
Western United States
.The Western United States, commonly referred to as the American West or simply "the West," traditionally refers to the region comprising the westernmost states of the United States. Because the U.S. expanded westward after its founding, the meaning of the West has evolved over time...
and Southwestern U.S.
Southwestern United States
The Southwestern United States is a region defined in different ways by different sources. Broad definitions include nearly a quarter of the United States, including Arizona, California, Colorado, Nevada, New Mexico, Oklahoma, Texas and Utah...
markets, and that 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. Mervyn's stores in Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
, Oklahoma
Oklahoma
Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...
, and Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
were the first to close, in February 2006. 28 stores in Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, as well as one store in Salt Lake City, Utah
Utah
Utah is a state in the Western United States. It was the 45th state to join the Union, on January 4, 1896. Approximately 80% of Utah's 2,763,885 people live along the Wasatch Front, centering on Salt Lake City. This leaves vast expanses of the state nearly uninhabited, making the population the...
, were also closed.
In 2007, an additional 18 stores were closed. Of the stores closed, 17 were in Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
and Washington, and one in Grand Junction, Colorado
Grand Junction, Colorado
The City of Grand Junction is the largest city in western Colorado. It is a city with a council–manager government form that is the county seat and the most populous city of Mesa County, Colorado, United States. Grand Junction is situated west-southwest of the Colorado State Capitol in Denver. As...
, which was the last remaining Mervyns store in that state.
Bankruptcy
Signs of financial distress and possible bankruptcy surfaced on July 21, 2008, when the Associated PressAssociated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
reported that Mervyn's 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
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
bankruptcy, or going out of business altogether. The company made no official comments at the time, but on July 29, 2008, Mervyn's announced that it had filed for Chapter 11 bankruptcy protection. 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.
Lawsuit with private equity investors
When Sun Capital Partners, Cerberus Capital Management, and Lubert-Adler bought Mervyns, the new owners changed the structure of the company, dividing it into separate real estateReal estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
and retail businesses. In essence, the Mervyns real estate arm charged retailer Mervyns huge rents for its department store space.
In September 2008, Mervyns sued the private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
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.
Store closures due to bankruptcy
Although the company initially vowed to keep all locations open during the reorganization efforts, the company announced in August 2008 the closure of 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 IdahoIdaho
Idaho is a state in the Rocky Mountain area of the United States. The state's largest city and capital is Boise. Residents are called "Idahoans". Idaho was admitted to the Union on July 3, 1890, as the 43rd state....
market, whose sole store in Boise
Boise, Idaho
Boise is the capital and most populous city of the U.S. state of Idaho, as well as the county seat of Ada County. Located on the Boise River, it anchors the Boise City-Nampa metropolitan area and is the largest city between Salt Lake City, Utah and Portland, Oregon.As of the 2010 Census Bureau,...
was one of the ones marked for closure. In Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, a complete retreat was slated from San Antonio
San Antonio, Texas
San Antonio is the seventh-largest city in the United States of America and the second-largest city within the state of Texas, with a population of 1.33 million. Located in the American Southwest and the south–central part of Texas, the city serves as the seat of Bexar County. In 2011,...
, where all three remaining stores were marked for closure, in addition to the closure of the sole stores in Lubbock
Lubbock, Texas
Lubbock is a city in and the county seat of Lubbock County, Texas, United States. The city is located in the northwestern part of the state, a region known historically as the Llano Estacado, and the home of Texas Tech University and Lubbock Christian University...
, Midland
Midland, Texas
Midland is a city in and the county seat of Midland County, Texas, United States, on the Southern Plains of the state's western area. A small portion of the city extends into Martin County. As of 2010, the population of Midland was 111,147. It is the principal city of the Midland, Texas...
, and Odessa
Odessa, Texas
Odessa is a city in and the county seat of Ector County, Texas, United States. It is located primarily in Ector County, although a small portion of the city extends into Midland County. Odessa's population was 99,940 at the 2010 census. It is the principal city of the Odessa, Texas Metropolitan...
.
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.
As of May 2010 Kohl's had acquired more than 80 of the shuttered Mervyn's locations. With the downturn in the restate market, Kohl's has taken over these locations sometimes at half the rent Mervyn's was paying.
Liquidation
Although the company attempted to undergo reorganization under bankruptcy, Mervyn's ultimately succumbed to the ongoing US recessionLate 2000s recession
The late-2000s recession, sometimes referred to as the Great Recession or Lesser Depression or Long Recession, is a severe ongoing global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. The Great Recession has affected the entire world...
and announced that it would liquidate its assets through Chapter 7 of the United States Bankruptcy 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
Forever 21
Forever 21 is an American chain of clothing retailers with branches in major cities in The United States, Puerto Rico, Canada, Europe, Asia, and the Middle East that offers fashion and accessories for young women and men....
to purchase 149 of the remaining Mervyns stores for an undisclosed amount. The original negotiations failed, and Mervyn's liquidated all 149 stores under the bankruptcy action. Several months later, department store retailer Kohl's
Kohl's
Kohl's Corporation is an American department store chain headquartered in the Milwaukee suburb of Menomonee Falls, Wisconsin, operating , 1,089 stores in 49 states. In 1998, it entered the S&P 500 list, and is also listed in the Fortune 500...
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. Kohls has indicated it might take over more former Mervyns locations in the future.
Future
In a KPIX-TVKPIX-TV
KPIX-TV is the CBS owned and operated television station in San Francisco, California. Through its parent company CBS Corporation, KPIX is co-owned with The CW affiliate KBCW-TV ....
interview on February 11, 2009, Mervin Morris' son Jeff revealed that the family had bought the Mervyns name and intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
, 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.
On February 18, 2009, the Mervyns website (Mervyns.com) was replaced with a single-page site that allows visitors to sign-up for a mailing list to receive updates about the future of Mervyns.
For a brief period in July 2011, Mervyns.com redirected to a Yesmail Enterprise
Yesmail
Yesmail, an email marketing solutions provider, is headquartered in Portland, Oregon and has offices in San Francisco, New York, Chicago, Atlanta, Omaha, Toronto, and London....
login page. The site has since been restored to the Mervyns mailing list sign-up page, as described above.