Gottschalks, Inc. filed for bankruptcy protection under the Chapter 11 law. The company plans to stay open while it seeks a buyer.
“While we have aggressively pursued a number of important steps over the past year to improve our performance and reduce costs, the persistent challenges in the economy and recent unexpected reductions to our borrowing capacity as a result of tightening credit markets have left us no other recourse than to pursue a sale of the company under court approval in city as a result of a Chapter 11 proceeding,” said Jim Famalette, Gottschalks chairman and CEO, in a press release.
Gottschalks may face the same fate as retail stores like Mervyns and Circuit City, which have already closed down due to the recession.
“The economy is affecting all the companies around the globe,” said a Gottschalks company official.
Even though the company is undergoing negotiations and reorganization processes, stores will run normally.
“They are continuing to receive inventory and they are operating businesses as usual in all of their stores,” the company official said.
According to a press release, sales in December decreased by 9 percent from the prior year.
Gottschalks, the only department store in Davis, has been beneficial for the city.
“[The retail store] benefits the community in multiple ways,” said Sarah Worley, economic development coordinator of Davis. “It provides revenue, shopping opportunities, and jobs.”
Because the company is still under the reorganizing process and negotiations, Gottschalks’ outlook is still unclear.
“Right now we’re just waiting to see what happens,” Worley said. “We want Gottschalks to stay and hope that they seek investors to sustain the store.”
The location also allows close proximity to purchase necessary items.
“We can purchase goods locally and not have to get out of town,” Worley said.
Gottschalks also has a location at the County Fair Mall in Woodland.
JANET HUNG can be reached at city@ theaggie.org.