Montgomery Ward, a retail pioneer that largely lost touch with the American consumer it helped shape, is going out of business after 128 years.
The Chicago-based retailer said yesterday it will close its 250 stores and 10 distribution centers - which employ 28,000 workers - over the next few months. The company, owned by a division of General Electric Co., said it filed for protection under Chapter 11 of the bankruptcy code in U.S. Bankruptcy Court in Delaware.
"It's a pity," said Walter F. Loeb, a retail analyst with New York-based Loeb Associates. "I'm sad anytime a department store closes, but Montgomery Ward was an irrelevant store that had lost its reason for being.
"It was no longer important to the customer because there are better forms of retailers in the market."
Wards' announcement came 16 months after the chain emerged from a two-year bankruptcy - during which it closed more than 100 unprofitable stores and launched a plan to remodel half its stores at a cost of $180 million.
The company, which has stores in 30 states, operates 13 stores in the Baltimore-Washington region, including stores in Towson, Annapolis, Laurel, Glen Burnie, Rosedale, Security Square, Bel Air, Hagerstown, Frederick and St. Charles. The Wards at Golden Ring Mall in Rosedale was expected to be one of that mall's only stores to remain when developers transform the mall into a power center this year.
Wards dropped the "Montgomery" from its name last year as part of its image makeover.
Despite three years of work to breathe new life into a chain regarded as old, cluttered and fashion-deprived, "Overall weak holiday sales and a very difficult retail environment simply did not permit us to complete the turnaround that might have been possible in an otherwise thriving economy," said Roger Goddu, chairman and chief executive officer of Wards.
The period between Thanksgiving and Christmas can account for as much as a quarter of a retailer's annual sales, and a poor performance during those weeks can sink a troubled chain. Wards' announcement followed a similar one by Bradlees Inc., a Northeast discount chain that earlier in the week announced plans to liquidate.
Retail analysts said tough competition got the better of Wards.
"It's been a very competitive and challenging retail environment for companies like Wards that target the moderate customers," said Sally Wallick, a retail analyst with Legg Mason Wood Walker in Baltimore. "Even in our market, we've seen a lot of new, strong competitors coming in - Target, Kohl's, even an Old Navy."
Seeking a niche
Wards failed in its turnaround mission to find a niche between the all-powerful mass merchants, such as Wal-Mart, Target and Kmart, and more upscale department stores, such as The Hecht Co.
"There's not a niche there," said George Whalin, president of Retail Management Consultants in San Marcos, Calif. "It doesn't exist."
In February, Goddu said the renovated stores, with a circular design, brighter lighting and a trendier mix of apparel and home accessories, were proving such a hit that the retailer planned to remodel all its stores in five major markets, including the Baltimore-Washington region, in time for the holiday season.
Goddu had said that the store improvements had helped boost sales to an average $200 per square foot, compared with the chainwide average of $150 per square foot.
Yesterday, in the statement, Goddu said that despite continuing positive sales trends at the remodeled stores, "we have not delivered the necessary financial result to warrant completion of our total company turnaround strategy."
"The biggest issue is they waited too long to try to reinvent themselves," Whalin said. "It's only been three or four years. Sears and other companies started much before that. Most of the [Wards] stores are too old and tired. The shift that took place in retailing took place a long time ago."
Sears, Roebuck and Co., founded in 1886, has managed to thrive by promoting its "hardlines" goods such as appliances, as well as its "softer side," the tag line used in a marketing campaign to highlight apparel and jewelry.
Infusion of cash
Analysts said they believe Wards would have succumbed to bankruptcy sooner - or perhaps never have emerged from it the first time - without the infusion of cash from GE Capital Services, the GE division that had owned half of Wards and acquired the rest of the chain and its credit-card business as part of the bankruptcy restructuring. GE Capital typically accounts for more than 40 percent of the parent company's profit.
Wards has been "dependent on GE's largesse to stay in business," said retail consultant Neil Stern, a partner at McMillan & Doolittle in Chicago. "Management has just run out of time."
The decision to file for Chapter 11 was made by Wards' board, said GE Capital spokesman John Oliver.
Founded in 1872