Filene's Basement Filing for Bankruptcy, Closing its Doors Next Year
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Filene’s Basement Filing for Bankruptcy, Closing Next Year

November 9, 2011

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Massachusetts-based bargain clothing store Filene’s Basement has announced plans to file for Chapter 11 liquidation bankruptcy and close its doors by 2012, according to The company, which originated in Auburn, MA, more than 100 years ago, pioneered the concept of bargain selling as a mainstream way to do commerce.

Today, the chain includes 21 stores and employs more than 1,500 people. Competition from other retailers, combined with the economic downturn, though, has proven to be more than Filene’s can handle.

According to sources, executives from Syms, the company that owns Filene’s, considered a number of options to resolve its debt problems but ultimately decided that bankruptcy would be best for all parties involved. In its court documents, the company reported between $1 and $10 million in assets and between $10 and $50 million in debts.

Not the First Time in Court

Interestingly, this will not be the first bankruptcy filing for Filene’s Basement. The chain actually has two previous bankruptcy filings under its belt, the most recent of which occurred in 2009. It was during that bankruptcy that discount chain Syms purchased Filene’s, with plans to revive it to its former robustness.

Clearly, those plans have not panned out.

Sources note that Filene’s Basement retailers will remain open during the holiday season, during which liquidation sales will take place. The schedule of actual store closings, it seems, will depend largely on how quickly merchandise moves during holiday shopping.

An Outdated Business Model?

Analysts of the Syms/Filene’s bankruptcy have attributed the company’s financial failure in part to a business model that didn’t adapt to the times. When it was first established, Filene’s Basement provided a unique opportunity for shoppers to get name-brand goods at discount prices.

But in the last several decades, upscale retailers such as Nordstrom and Saks Fifth Avenue have introduced their own "off price" divisions to sell overstocked and out-of-season merchandise, meaning that Filene’s no longer offered shoppers unique buying opportunities.

Filene’s Basement was founded in 1909 by William Filene. In recent years, it has become famous for its "Running of the Brides" event, during which brides were able to shop/fight for deeply discounted wedding dresses.

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