Filene's Basement in Baltimore's Inner Harbor will remain open after all, since a new buyer emerged Monday for the bankrupt off-price retail chain.
Discount retailer Syms Corp. and Vornado Realty Trust won an auction for the New England-based chain in a $62.4 million deal to buy 23 of the retailer's 26 stores, said Gerry Corrigan, managing director of Abacus Advisors, which is helping Filene's with the restructuring.
The deal, which is expected to be approved by the bankruptcy court as soon as Thursday, comes less than a week after a winning bid by Men's Wearhouse, which would have closed the Baltimore location in mid-June, was declared invalid by a judge.
Officials with the Downtown Partnership of Baltimore, who had argued the closing wasn't a reflection of downtown, were happy with the news, which they heard from management at the store late Monday afternoon.
"We always viewed the reports about Filene's Basement closing to be reflective of what was happening nationally and had nothing to do with downtown being a viable retail destination," said Kirby Fowler, president of the Downtown Partnership. "This confirms that."
Filene's was held up as a sign of a shopping renaissance in downtown Baltimore when it opened two years ago. The closing of the store at the Lockwood Place shopping center - also home to Best Buy, Fogo de Chao Steak House and P.F. Chang's - came as a disappointment to many.
One retail expert said that such a large vacancy would have made it harder to sell downtown shopping in such a weak retail environment.
"It's a difficult economy and retailers are looking very carefully at where other retailers have or have not been successful," said Jerome Trout III, a principal with Trout Daniel & Associates, a Baltimore commercial real estate company. "It certainly doesn't help to see some that are closed and have to convince someone that the marketplace is healthy, regardless of whether Filene's was doing well here and had larger systematic issues."
But Trout said that he could see Syms expanding further into a market because retailers usually want more than one store in a region.
Filene's entered Chapter 11 bankruptcy in May in Delaware bankruptcy court. Earlier in the auction process, Men's Wearhouse was announced as the buyer. But other bidders objected to the result last week and accused Men's Wearhouse of failing to meet the auction requirements.
A judge directed Filene's last week to reopen the process. The store on Pratt Street in Baltimore was not included among 17 to 20 Filene's stores Men's Wearhouse had planned to buy in its bid.
Corrigan said the Syms bid, though less than that of Men's Wearhouse, has a better return for creditors because it includes more leases.
"Men's Wearhouse was offering more cash and taking fewer leases, which means landlords would have more claims," Corrigan said. He said he expects the judge to approve the sale.
He said the Baltimore store was a late addition, but he didn't know why Syms decided to keep the stores. Davia Temin, a spokeswoman for Syms, said Monday, the company would not yet comment on the deal. Syms is also taking all the inventory, employees and warehouses in the deal, Corrigan said.
Filene's closed stores in Columbia, Hunt Valley and Towson in January, leaving the downtown store, with 41 employees, as the only one in the Baltimore region. Filene's Basement was founded more than a century ago in Boston as a place for the Filene's department store to sell excess merchandise.
Filene's, known for its "Running of the Brides" wedding dress sale, ran into trouble by expanding too aggressively into areas with expensive leases and then watching the economy collapse, analysts have said. It also suffered from losses when its flagship store in Boston was shut temporarily for a redevelopment project. Some experts have also said the retailer focused on designer brands, still expensive even when discounted, in a time when consumers were trading down to less expensive items.