Caldor Corp., the latest casualty of a retail war being won by mass discounters, said yesterday it will shut down for good this spring, closing 145 stores -- including eight in the Baltimore area -- and laying off its 20,000 employees.
The Norwalk, Conn.-based retailer, with discount stores throughout the Northeast, has operated under bankruptcy court protection since 1995. The company announced Jan. 9 that it had stopped ordering or taking delivery of new stock from suppliers.
The $2.5 billion company had attempted to return to profitability by cutting costs and closing stores -- including one at Cranberry Mall in Westminster and another at Golden Ring Mall in Rosedale last year -- but said it fell short of its goals. Creditors' vigorous opposition to reorganization plans left Caldor no choice but to liquidate, the company said.
"The board had no alternative but to conclude that this was the most appropriate course of action under these circumstances," said Warren D. Feldberg, chairman and chief executive officer.
Though discount retailers in general have performed extremely well during the past year, smaller, regional discounters have struggled against their larger competitors, especially Wal-Mart Stores Inc., analysts said.
Caldor, which stocked its shelves with a broad range of products including apparel, appliances and health and food products, tried to freshen the look of some stores, but the makeover proved futile, said Kurt Barnard, president of Barnard's Retail Trend Report and Barnard's Retail Consulting Group in Upper Montclair, N.J.
"Its principal sin was not providing the shopper with a reason to shop Caldor in preference to competitors," Barnard said. "Merchandise selection was not good enough, and they were up against powerful competition. As a stand-alone retailer, it is very difficult to prevail."
Some of the large retailers that squeezed Caldor will be most likely to take over its stores, analysts said. Kmart Corp., Dayton Hudson's Target division and Kohl's Corp. are negotiating to buy Caldor leases. Other potential buyers include Home Depot and Borders Books and Music, retail experts said.
Representatives of Kmart, Target, Home Depot and Kohl's declined to comment yesterday, though all said their companies are aggressively expanding in the Northeast and Mid-Atlantic regions.
"We have not finished expanding," said Katrina Blauvelt of Atlanta-based Home Depot. "We're always looking" for store sites.
Reporting a net loss of $27.8 million for the quarter that ended Oct. 31, Caldor raised doubts about its ability to remain in business in a Securities and Exchange Commission filing last month.
The company is seeking bankruptcy-court approval to sell the leases on its properties, which range in size from 40,000 square feet for older locations to 120,000 square feet for newer stores.
"Going out of business" sales will begin to appear in several weeks and will remain through mid-May, when all the stores are expected to close.
In the Baltimore area, where an estimated 600 employees will lose their jobs, real estate brokers and developers believe that former Caldor stores won't stand vacant for long, especially those along high-density corridors such as York Road and U.S. 40 in Baltimore County.
Caldor runs stores in Reisterstown Road Plaza in Baltimore; in Chatham Mall in Ellicott City; in Parkway Crossing on Perring Parkway; on York Road in Towson and Timonium; and in Catonsville, Glen Burnie and Severna Park. It bought several of those locations from the defunct Stewart's chain.
Caldor's demise "is going to create some opportunities, given that the market is pretty tight for large blocks of retail space, particularly well-located space," said J. Lawrence Mekulski, a retail partner at KLNB Inc. "I think [leases] will be snatched up pretty quickly. You're going to see deals happen quickly."
Prospective new tenants in the Baltimore area could include those reported to be in negotiations as well as retailers that typically take smaller amounts of space, he said.
Caldor's fate did not surprise the retail real-estate community, including landlords at shopping centers anchored by Caldor stores.
"Caldor had clearly been talking to some discount chains -- Kohl's and Kmart and Target -- about buying [Caldor] stores, and my guess is, that's going to proceed," said Patrick Hughes, president and chief executive officer of Mid Atlantic Realty Trust, which owns Lutherville Station, anchored by Caldor and Metro Food Market.
"When we purchased the center in 1993, we did not buy it because it had Caldor; we bought it at a bankruptcy auction and liked the location of the real estate," Hughes said. "We're in a good community, where the income characteristics are strong, and it's an established location on the light-rail line. And there are some retailers that are not in that market."
To recoup money for creditors, bankruptcy trustees probably will try to sell the leases of stores with the best locations or those with better-than-market value. The less valuable leases will revert to landlords.
The possibility of having to re-lease one of its anchor spots doesn't worry Chicago-based Tri-Land Properties, which manages Catonsville Plaza on U.S. 40 in Catonsville, said Terry Alexa, Tri-Land's vice president of leasing.
Caldor's bankruptcy "created an environment in our shopping center of some uneasiness," Alexa said. "We're looking at this as an opportunity. Hopefully, we can bring someone in to solidify the development."
The first Caldor store was opened in 1951 in Port Chester, N.Y., by Carl and Dorothy Bennett, who invested their $8,000 life savings. The discount house sold name-brand housewares, luggage and photo merchandise. By the mid-1970s, the company had grown into a chain of more than 30 stores. It had 166 stores when it filed for Chapter 11 bankruptcy in September 1995.
Pub Date: 1/23/99