Amid rumors first reported in the Wall Street Journal on July 21, 2008, Mervyns has refused to comment on any plans to file bankruptcy. However, the company recently stopped providing its financial information to credit-monitoring firms, leading to speculation that the chain may file for bankruptcy protection.

Bob Carbonell, chief credit officer of Bernard Sands, a credit-monitoring company, said, “I’m advising my clients to hold all shipments at this time due to a lack of communication from Mervyns management. To the best of my knowledge, virtually all of my clients have stopped shipping goods.”

Mervyns is headquartered in Hayward, California, and 129 of its 177 stores are located in California, which has been hard-hit by the housing crisis. Without vendor shipments, Mervyns will be unable to compete with other mid- and low-end retailers such as Wal-Mart and Target for crucial back-to-school sales over the next few weeks.

Since the sale of Mervyns by Target Corp. in 2004, the company was restructured to separate its retail operations from its real estate holdings. Over the past four years, Mervyns has pulled out of Oregon and Washington, and there are fears that further store closings could leave a glut of empty commercial space in California.

The most recent press release on the Mervyns website is dated May 19, 2008, and refers to plans to open five new stores by 2009, sell other store locations, and launch an e-commerce website in late 2008. According to the press release, “These initiatives are the latest elements of a new strategic plan, crafted by new CEO John Goodman,” who joined Mervyns in April after serving as president of the Dockers brand for Levi Strauss & Co.

“We have a plan that centers around our consumer and her needs, and we are putting the capital and people resources behind it to not only overcome the current difficult retail climate, but to gain market share and reinvigorate the Mervyns brand,” said Goodman.

When asked last week about the bankruptcy speculation, Mervyns spokesman Roy Berces stated, “There’s nothing we can say at this time.” Berces then confirmed that the company still plans to open a new 80,000 square foot store in Newark.

Here are links to full the full article:

http://www.latimes.com/business/la-fi-mervyns22-2008jul22,0,3160638.story
http://www.bizjournals.com/sanfrancisco/stories/2008/07/21/daily41.html
http://www.mervyns.com/AboutDetail.aspx?id=1572

Kathleen