Big Sky Network

Last week we heard of the bankrupty filings of Mervyns and Linens and Things. Large retailers with major competition, and an economy where people are not purchasing new homes to decorate. In the recent trends of mega mergers, it was interesting that Bed, Bath and Beyond did not purchase Linens and Things.

Target, Inc sold Mervyns in 2004 for $1.2 billion. The purchasers, a private equity group including Cerberus Capital Management and Sun Capital Management promptly took control of the real estate and leased it back to Mervyns at a much higher rate. It used these proceeds to finance the acquisition. In a time of cost cutting and declining revenues, Mervyns was faced with an increase in expenses, which has ultimately led to its bankruptcy filing. Mervyns has sued the investment group and the outcome should be interesting.

Sharper Image which had filed bankruptcy and liquidated stores in February made an interesting annoucment; it has signed a $540 million licensing agreement with manufacturer HoMedics. Those gadgets it was so well known for will continue to be available. The company website states “Sorry to keep you in the dark, but there is something big coming soon.” In a press release the company stated it is transforming from a retailer to a “a global lifestyle brand licensor.” What the heck? Reading on it states that the company has “developed a global licensing strategy for wholesale, e-commerce, catalog and direct-to-retail (DTR) businesses.” Fancy talk for marketing products under the Sharper Image brand and selling them to brick-and-mortar and website retailers.