Liquidation sales began in October for the nationwide home accessories retailer, which filed for bankruptcy protection last May. Linens 'n Things originally attempted to close underperforming stores and restructure its debt. But the company later threw in the towel because it couldn't find a buyer and losses mounted. More than 300 Linens 'n Things stores, including outlets in Billings and Bozeman, will close for good after the merchandise and fixtures are sold.
Richard L. Kaye, executive vice president of Hilco Merchant Resources, a Chicago-based company that specializes in "strategic store closings," said liquidation sales typically take from six to 12 weeks. He couldn't pinpoint the exact date when the Billings store is emptied. Another retailer has expressed an interest in the Billings space, but the landlord isn't saying.
"Store closings are typically handled in the same way as any other sale event, with advertising in the local papers, TV, radio and things going in the mail," Kaye said.
When Linens 'n Things decided to liquidate, Hilco bought all of its assets at auction. He then began a going-out-of-business sale, designed "to recover the greatest value for those assets," Kaye said.
When a store is being closed, a liquidator will sometimes stuff the shelves with steeply discounted merchandise trucked in with the hope of scoring quick sales from bargain hunters. Hilco has no intention to follow that practice, which is known as augmentation, Kaye said.
Many states and cities have laws and local ordinances that limit liquidation sales for a specific time period, so that merchants can't advertise a perpetual going out of business sale as a gimmick.
Kaye said Linens 'n Things didn't get into trouble overnight, and neither did other struggling retailers.
"It's not something that has come upon the retail world in the last, 30, 60, 90 days," Kaye said. "We have a lot of retailers that have competitive problems. They're seeing their margins shrinking and they're getting over leveraged."
Retail analyst Britt Beemer of America's Research Group predicts that the 2008 Christmas season could be a rocky one for many retailers. Linens 'n Things is one of nearly 20 retailers that have sought bankruptcy protection this year. ARG reports that many Americans are even scaling back on the purchase of gift cards, fearing that the retailer issuing them may soon go out of business.
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