Bankrupt stores can still sell their name
Several big retail chains have been going bust in this economy, with Circuit City and Mervyn's the latest to fall. But some companies are willing to spend some money on a still valuable brand name. Mitchell Hartman reports.
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Bill Radke: Pioneer is not alone in its suffering. We’re about to get the January retail sales figures this morning. They’ve been ugly lately. Several big retail chains have bust, including Circuit City and Mervyn’s. There is, however, a booming business right now in buying up the rights to the defunct brands left behind by bankruptcy. Mitchell Hartman explains.
Mitchell Hartman: Sharper Image, Bombay Company — these firms have gone belly-up, but there’s still a lot of value in their names, says Jamie Salter. He’s CEO of Hilco Consumer Capital, which has bought these and other top-notch brands at bargain prices.
Hilco spent $34 million on Sharper Image. Last week, it bought Linens ‘n Things.
Jamie Salter: Which will be a dot-com play and a store-within-a-store.
Now some of these brands fell on hard times in recent years, and their retail stores weren’t loved or even much frequented by consumers. But Salter says they still have high name recognition.
Salter: When we get a hold of a company, we sell off or liquidate the parts that are no good, that don’t work, that are broken. And the parts that are good, you know, we build upon them.
Salter says his company is looking to buy three more bankrupt retail names, including a well-known electronics chain. Circuit City, anyone?
I’m Mitchell Hartman for Marketplace.