Filene’s Basement Files for Chapter 11 Bankruptcy

Discount retailers no longer safe

The recession has deepened to the point that even discount retailers are now vulnerable to the slow sales that have plagued high-end stores from the beginning. Filene’s Basement, which sells designer clothes at discounts, has filed for Chapter 11 Bankruptcy.

The chain plans to sell 17 of its 25 stores. But don’t rush out to get a quick payday loan. A liquidation sale is not part of the plan.

Future of Filene’s Basement

If the deal to sell the 17 stores goes through, it will mostly appear to be business as usual from the outside. Filene’s Basement plans to sell the stores to Crown Acquisitions, a commercial real estate firm based in New York. Crown intends to continue selling discount designer goods and operate under the name Filene’s Basement.

Before the sale can go through, though, the deal has to be tested through a bankruptcy law-mandated auction. The auction will be held in the next five weeks, and Filene’s will open bidding on its remaining assets.

The plot thickens

Crown Acquisitions isn’t planning to buy the Filene’s Basement stores on its own. Crown says it will partner with real-estate owner Chetrit Group. The group’s properties include the Sears Tower and the Manhattan property that is home to Filene’s Sixth Avenue store.

Still too pricey

On the Filene’s Basement web site, the company says it sells merchandise from a huge array of designer retailers, including Gucci, Fendi and Prada. The products at Filene’s Basement go for 30 to 60 percent less than the original retail prices.

On the Filene’s Basement clearance racks, customers can find products for up to 90 percent off. However, it appears even discounts this deep weren’t enough to bring in the customers Filene’s needed.

Where in the world?

Filene’s Basement stores are mostly in the northeast, with the farthest west location in Chicago. There’s also a store in Atlanta and one in Miami. You can find the store closest to you with the Filene’s Basement Store Locator.

Most of the stores are in New York, New Jersey and on the coast of Massachusetts and New Hampshire.

After all these years

Filene’s Basement first opened in 1909. It was the first store of its kind and is credited with being the dawn of the “off-price” store. In its beginning, Filene’s would mark the date it got a piece of merchandise, then automatically reduce the price by 25 percent. After a predetermined length of time, the price would automatically drop 50 percent, then later 75 percent.

After time ran out on goods that wouldn’t sell at 75 percent off, they were donated to charity. Filene’s Basement didn’t turn a profit until 10 years after it opened, but its main purpose was just to try to get some cash for the items that didn’t sell at full price at Filene’s Department Store.