Gift cards: With possible Woodbridge, Bridgewater mall bankruptcies, be careful (corrected)

Bankruptcy for Bridgewater Commons may come Dec. 1.

With the news Sunday that the owner of the Bridgewater Commons and Woodbridge malls may declare bankruptcy as early as December 1st, Plainfielders will want to take special care with any gift card purchases for this holiday season.

Thanks to reader Sandy G. for pointing me toward a number of store closings, though the original list of retailers who have either gone bankrupt, closed significant numbers of stores this year, or have announced closings after the Holiday shopping season was partially outdated and/or incorrect.

(Apologies to the readers who shop Talbots for inciting panic attacks, though I'm sure Talbots will thank you for your orders!)

Here is a CORRECTED list from Snopes.com, with information about each chain, current as of 11/22/2008, which is more accurate than the list originally posted here --

Origins: During prolonged economic downturns (or when signs indicate such a phenomenon is looming on the horizon), retail chains often retrench by scaling back expansion plans, delaying the openings of planned new stores, and closing underperforming or redundant outlets. The long list of chain stores referenced above includes businesses currently in a variety of different financial states: Some have gone bankrupt and closed for good, some have sought bankruptcy protection but remained open, some have already been through bankruptcy proceedngs and have emerged in a reorganized state, some have closed a significant portion of their outlets, and some have closed a relatively small percentage of underperforming stores. (Note that filing for bankruptcy protection does not necessarily mean a company is going out of business — Chapter 11 provisions allow businesses to propose reorganization plans that will enable them to continue functioning as they pay their creditors over time.) Although federal law allows companies to stop honoring gift cards when they file for Chapter 11 bankruptcy protection, not all businesses do so. Some companies may continue to redeem store gift cards while they reorganize, while others may temporarily suspend redemption of gift cards for some period of time and resume it later. That any particular retail business has recently filed for Chapter 11 protection does not automatically mean that any gift cards or gift certificates it has previously issued will "not be valid for much longer."

Business information of this nature tends to be volatile, especially in times of economic upheaval. As best we could determine according to various news accounts published so far in 2008, the chains named above are planning, or have made, the following cutbacks:

• The Ann Taylor chain of women's clothing stores (which includes Ann Taylor, LOFT, Ann Taylor Factory and LOFT Outlet stores) said in Novermber 2008 they would expand the scope of a restructuring announced in January 2008 that included the closing of 117 stores (out of approximately 966 locations).
  
  
• The Bombay Company chain of imported home furnishings stores filed for Chapter 11 bankruptcy protection in September 2007. All 384 of its U.S.-based stores were closed and liquidated in January 2008 (but new ownership still operates approximately 48 Bombay & Co. stores in Canada).
  
  
• The Caché chain of women's specialty apparel stores closed 14 underperforming outlets, but is still has 295 stores across the country and is still opening new stores.
  
  
• The Charming Shoppes chain of plus-size women's apparel stores has closed 150 of its approximately 2,360 outlets.
  
  
• The Circuit City chain of retail electronics stores filed for Chapter 11 bankruptcy protection in November 2008 and is closing 155 stores across the U.S. (More information about Circuit City's business operations under Chapter 11 protection can be found here.)
  
  
• The CompUSA chain of consumer electronics stores was sold to the Gordon Brothers Group restructuring firm in December 2007, and most of its 103 outlets were subsequently closed. In January 2008 many of the remaining assets and the CompUSA brand were sold to Systemax, Inc. which currently operates 23 CompUSA stores in Florida, Illinois, North Carolina and Puerto Rico, as well as an online store, CompUSA.com. (CompUSA continues to accept gift cards.)
  
  
• The Dillard's department store chain closed 20 outlets in 2008 and said it expects more store closures in 2009.
  
  
• The Disney Store chain was reacquired by the Walt Disney Co in March 2008; Disney has since closed 98 of its 322 North American stores.
  
  
• The Eddie Bauer chain of casual apparels stores shut down 27 outlets in the first quarter of 2008 and planned to close a few more stores by the end of the year.
  
  
• The Ethan Allen chain of home furnishings stores closed 12 retail design centers and two service centers in 2008.
  
  
• The Foot Locker chain of shoe stores chain closed 274 outlets (out of more than 3,700) in 2007 and another 60 in the first quarter of 2008, with more such closures likely.
  
  
• Whitehall Jewelers acquired the remnants of the Friedman's and Crescent chains in early 2008 after that combined company entered bankruptcy, then Whitehall itself filed for Chapter 11 bankruptcy protection in June 2008 and began liquidating and closing all 373 of its remaining stores.
  
  
• The Gap chain of clothiers (whose brands include Old Navy and Banana Republic) closed 17 stores while opening 37 more during the third quarter of 2008, ending with a total of 3,190 outlets. The company expects to close 115 stores while opening 100 more locations during the 2008 fiscal year.
  
  
• The Movie Gallery/Hollywood Video video rental chain filed for Chapter 11 bankruptcy protection in October 2007, just after announcing plans to close 520 stores. In February 2008 the chain announced closings of 400 more outlets, and in April 2008 Movie Gallery said they were shutting down another 160 underperforming stores. The chain emerged from bankruptcy reorganization in May 2008 and currently operates about 3,500 outlets.
  
  
• The Home Depot chain of home improvements stores announced in May 2008 that it would be closing 15 underperforming outlets.
  
  
• The KB Toys chain of retail toy stores entered Chapter 11 bankruptcy protection in January 2004 and at that time announced plans to close 375 of its outlets. It emerged from Chapter 11 reorganization in August 2005.
  
  
• The Kirkland's chain of home decor stores is expecting to close 130 (of its approximately 335) outlets by the middle of 2009.
  
  
• The Levitz Furniture chain filed for Chapter 11 bankruptcy protection (for the third time in ten years) in November 2007 and shortly afterwards began the process of closing its stores and liquidating its remaining inventory.
  
  
• The Lowe's chain of home improvement stores announced that it was "scaling back" in the sense of opening fewer new outlets in 2008 and 2009 than originally planned, but the company still expects to complete the opening of between 115 to 120 new stores in 2008, with more new stores (and no closures) to follow in 2009.
  
  
• The Macy's chain of department stores (which also includes Bloomingdale's) closed 11 (of its approximately 850) outlets in 2008.
  
  
• Pacific Sunwear closed 74 underperforming stores in its d.e.m.o. line in 2007 and closed all 154 of its remaining d.e.m.o. stores in 2008. (The company has not so far announced plans to close any of its core Pacific Sunware outlets.)
  
  
• The Pep Boys chain of auto supply and repair stores closed 31 low-return outlets (out of approximately 600 stores) at the end of 2007.
  
  
• The Sharper Image chain of electronics and specialty gifts stores filed for Chapter 11 bankruptcy protection in February 2008, then began closing and liquidating all 184 of its outlets in June 2008.
  
  
• Sprint, a global provider of voice, data and Internet services, announced in January 2008 that it would be closing about 125 of its 1,400 retail outlets.
  
  
• Talbots Inc. announced in November 2008 that it was seeking to sell off its chain of J. Jill casual clothier stores. (Talbots has already shed its Talbots Kids, Talbots Mens and U.K. businesses and has closed an additional 28 Talbots stores out of about 1,400 total outlets.) However, we have found no announcement that Talbots is planning to close any J. Jill outlets in the near future: The chain still operates 283 locations, is still opening new stores, and is still selling and redeeming gift cards.
  
  
• The Wickes Furniture chain began liquidating merchandise and fixtures at locations nationwide in February 2008 as part of bankruptcy proceedings.
  
  
• Wilsons Leather (the Leather Experts) shut down its mall-based locations in 2008, but in July 2008 the Wilsons Leather Outlet Stores (and e-commerce) business was acquired by G-III Apparel Group, which currently operates 119 Wilsons outlets in the U.S.
  
  
• Zales Corp,, which operates Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers, and Piercing Pagoda, closed approximately 105 retail outlets (out of 2,130) in 2008, half of them kiosks and half of them stores. However, the company also opened approximately 100 new outlets in 2008, so the net change in the number of Zales-operated stores was relatively small.

Last updated: 22 November 2008

The URL for this page is http://www.snopes.com/politics/business/storeclosings.asp

Something to keep in mind as you think about possible gift card purchases, especially since bankruptcy law allows a retailer NOT TO MAKE GOOD ON GIFT CARDS, though some do, and some do after going through Chapter 11 reorganization.***

As always, when buying gift cards, be -- as Marci Sims says -- an educated consumer.

Make sure you understand whether there is an expiration date by which the card must be used up, if there are any fees the retailer will take out of the amount, and whether there are any exceptions to where or on what kind of merchandise the card may be used.

And, as always, save your receipts for the purchase of any gift card.

These are hard times, don't make it harder on yourself than it has to be.

***However, the story in Sunday's Courier says that 'mall gift cards will be honored if [General Growth Companies] declares bankruptcy'.

---

• Courier: "Owner of Bridgewater, Woodbridge malls may file for bankruptcy"

-- Dan Damon

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