Now that it is a ward of the bankruptcy court, one of the country’s oldest retailers faces such a daunting task to reorganize that few experts are giving it much of a chance to emerge as an ongoing company.
Talks with lenders to delay a $1.4 billion payment due in August broke down late Monday, so Chicago-based Montgomery Ward & Co. filed for Chapter 11 bankruptcy protection.
Consultants said the move will mean store closings and layoffs for the 400-store chain, which employs 60,000 people and had annual sales of $6.6 billion in 1996. Most analysts anticipate that the firm, a Chicago institution since 1872, will be dismantled and its best locations sold.
Much of blame for the retailer’s decline has been laid on a marketing malaise that came about because Wards lost touch with its customers. It was left to drift while some competitors went upscale with branded merchandise and others went the discount route and undercut Wards on prices.
As one consultant put it: “Price and quality are givens. If you don’t have those, you’re out of the game.”
Wards’ major owner, GE Capital Corp., also has been criticized for failure to invest enough to keep the stores up to date to give it a fighting chance against competitors.
