Goody's shutting doors after 55 years in business

By Carly Harrington knoxnews.com

Knoxville-based Goody's Family Clothing, which emerged from bankruptcy less than three months ago, is shutting its doors after failing to secure sufficient capital to keep the business operating.

Going-out-of-business sales could begin as early as Friday for the apparel retailer that got its start in East Tennessee more than 55 years ago.

Bob Carbonell, chief credit officer for retail credit rating service Bernard Sands, said a meeting was held Tuesday with potential liquidators who may run the sale.

More than 800 Knoxville-area employees will be affected by the closing, which will be especially painful for the local economy, said Mike Edwards, president and CEO of the Knoxville Chamber.

"With Goody's we have a company trying to do a workout in a weak economy, but it's tough to survive when you're already in distress," Edwards said.

Goody's officials did not return telephone calls for comment. New York-based Prentice Capital Management, the managing member of PGDYS Lending LLC, which has owned Goody's since 2006, did not respond to e-mailed questions.

Goody's filed for bankruptcy protection in June, saying it had been hurt by high gasoline and food prices. As part of its restructuring, Goody's closed more than 70 stores, as well as a distribution center and a New York office.

It emerged from bankruptcy in October and began offering its own bath and body line called Magnolia Spa, a section devoted to local college teams and new vendors like Chaps for Men.

Goody's CEO Paul White said in November that he expected the retailer to turn a profit in its fourth quarter. Reports, however, that Goody's was once again in financial trouble began to surface in December, when a trade publication reported the company was out of "cash, credit and restructuring resources."

Last month, the retailer stopped issuing new gift cards and discontinued its layaway and tuxedo rental services. And the week of Christmas, Goody's held a conference call with its suppliers seeking concessions.

Cathy Hershcopf, a bankruptcy partner at law firm Cooley Godward Kronish LLP, told Reuters that Goody's is "in the processes of obtaining bids to liquidate substantially all collateral and inventory. The retail environment is very difficult and they did not have sufficient capital to weather the bad times."

The law firm is acting as a liaison between Goody's vendors and the company and Prentice.

Goody's was founded in 1953 by the Goodfriend family. It grew to more than 300 stores operating primarily in the South and Midwest. The business became a privately held company when it was sold in January 2006 to GMM Capital and Prentice Capital. It is currently owned by PGDYS Lending LLC; Prentice Capital Management.

Goody's has about 9,800 employees and annual revenues of $800 million, according to a company fact sheet that was posted on its Web site Dec. 10.

BACK
1/7/08