Citing keen retail competition, soft consumer demand and record-setting debt, catalog specialty retailer W. Bell & Co. announced yesterday that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
To facilitate a restructuring of its finances and operations, the Rockville-based company will close 10 of its 18 showrooms next year, according to a press release. One of those outlets, at 11 S. Charles St. in downtown Baltimore, is scheduled to shut down next month.
Financial officer Martin Pfeifer declined to say how many people work at the 10 stores to be closed, or whether all of the affected employees will be laid off. "We're really not prepared to go beyond what's in the press release at this point," he said.
The bankruptcy filing took place in U.S. Bankruptcy Court in Rockville, Mr. Pfeifer said.
After the 10 outlets are closed in 1991, the retail company will have six remaining in metropolitan Washington, one in Woodlawn and one in Cockeysville.
W. Bell & Co. posted a $5.8 million loss on by revenues of $15.7 million for the third fiscal quarter, which ended Nov. 3, according to the prepared statement. W. Bell has accumulated more than $9.7 million in red ink for the first three quarters of its fiscal 1990 on revenues of $56.2 million, putting the company on a pace for its worst year ever.
Begun 40 years ago by Washingtonians Walter and Dorothy Bell, W. Bell & Co. was founded on the premise of offering consumers high-quality merchandise at low prices.
Its primary markets are the Baltimore-Washington area and metropolitan Chicago, although a failed attempt to expand into Houston was made a few years ago.
Efforts had been made to invigorate W. Bell's catalog showroom operations, which some competitors have called an outdated concept because many of its rivals now offer wider selections of high-quality merchandise at low prices.
In July, W. Bell Chairman Walter Bell announced that the company would be increasing the size of its catalog by 30 percent. Last year, the retailer implemented new systems to get consumers in and out of showrooms faster.
Some shoppers had expressed displeasure with having to wait for a salesperson to fetch merchandise from a storeroom after they had made a selection, then having to wait in line to pay for it.
In October, the financially ailing retailer of jewelry, electronics and housewares announced that it planned to close all six of its show rooms in the Chicago metropolitan area. That was followed yesterday by the announcement that the downtown Baltimore store will be shut down next month, as well as a Washington showroom in Georgetown and two Northern Virginia outlets in Fair Oaks Mall and Potomac Heights.
W. Bell & Co. has had financial difficulties during three of its last four fiscal years. The retailer posted losses of $2.1 million loss in 1986 and $8.1 million in 1987. The company appeared to have overcome its problems in 1988, when it generated a $1.8 million profit, but last year brought a $4.5 million loss.
In May, W. Bell put itself up for sale and hired Kidder, Peabody & Co. to look into options that included a possible sale or restructuring. Three months later, an obscure Hong Hong company known as Venture Link Ltd. offered $9.5 million for W. Bell.
Mr. Pfeifer said that offer is "still there; there's been no change in that."
W. Bell & Co.'s stock dropped 75 cents in over-the-counter trading yesterday to close at 50 cents.