Sundown approaches for Sunny's 15 stores

Elkridge firm files for bankruptcy protection and will close outlets

February 02, 2007|By Stacey Hirsh | Stacey Hirsh,Sun reporter

Sunny's Great Outdoors Inc., a local retailer that got its start selling military surplus in the aftermath of World War II, has filed for bankruptcy for the second time in a decade and is closing its stores, according to court documents.

The Elkridge-based company, which filed for Chapter 11 bankruptcy protection last week in U.S. Bankruptcy Court in Baltimore, has 15 stores around the Mid-Atlantic region and employs 150 full-time and part-time workers.

"The unseasonably warm fall and winter seasons wreaked havoc on ... sales," Sunny's says in its bankruptcy filing.

The documents also say that the company's holiday sales "fell below all levels of reasonable expectation," forcing it into bankruptcy.

Sunny's owes its 20 largest unsecured creditors a total of nearly $1.1 million, according to the bankruptcy filing.

Sunny's says it must hold liquidation sales and close its stores. The liquidation sales are expected to begin by tomorrow and end by March 31, according to court documents.

Sunny's is planning to liquidate all of its merchandise, furniture, trade fixtures and equipment and other assets at each of its stores, the documents say. "Once this process is complete, [Sunny's] will determine whether it can revive its business in a smaller format," the bankruptcy filing says.

Calls to the company yesterday afternoon were not returned. The company's attorney declined to comment.

Originally named Sunny's Surplus, the company began in 1948 with a store at Baltimore and Eutaw streets in downtown Baltimore. Named after one of its first managers, Sunny's targeted customers with military surplus from the war.

The business began to grow, adding to its inventory and increasing the number of stores in the decades that followed.

But the growth proved too ambitious for the small business, and in 1997, Sunny's filed for Chapter 11 protection. The company emerged from bankruptcy 13 months later.

Today, Sunny's has stores in Maryland, Virginia and Delaware. The stores sell camping, sporting and boating equipment, as well as clothing and outerwear. Its 2006 sales were about $11 million, according to court documents.

Last year, Sunny's worked to reduce overhead costs and increase sales to keep up with competitors such as REI and Dick's Sporting Goods, according to the court documents. But the unusually warm weather hindered sales, leaving Sunny's to face "mounting debt and a severe liquidity crisis," the documents say.

Sunny's faces stiff competition in the outdoor gear market from many regional and national chains, said Mark Millman, president of Owings Mills-based Millman Search Group, an executive search firm that specializes in the retail and shopping center industry and helped Sunny's find its former chief executive.

"What they were known for is now being carried by many other very large chains that have a lot of capital behind them and advertising dollars and strong merchandising executives who are making an inroad," Millman said.

Plus, in a warm winter, shoppers tend to steer clear of outerwear, leaving Sunny's in a position where it has to mark down those items and take a loss on them, Millman said.

"It had a good run," he said of the longtime Baltimore retailer. "It was a branded name; it had a good reputation in town. Everybody has its day, and I think the time has come."

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