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Published: Thursday, 2/26/2004

Denied financing, Leatherland to close

BY JANE SCHMUCKER
BLADE BUSINESS WRITER
The Franklin Park store, where Zachary Lawrence waits impatiently for his father, is likely to be among the last to close. The Franklin Park store, where Zachary Lawrence waits impatiently for his father, is likely to be among the last to close.
MORRISON / BLADE PHOTO Enlarge

The nation's second-largest leather goods chain a year ago, Leatherland Corp. of Perrysburg Township, is closing because it was unable to get financing to help it emerge from bankruptcy.

The company is to close all 25 of its remaining Leather Limited stores by the end of April.

Its only store in northwest Ohio or southeast Michigan is at Westfield Shoppingtown Franklin Park in Toledo.

"I had about 25 good years and two really bad ones," said Leatherland president and owner Jeff Bell. He started the corporation with a single store in Southwyck Shopping Center in 1978 when he was 21 years old.

The corporation filed for Chapter 11 bankruptcy protection from creditors in February, 2003.

At its height, in the fall of 2002, Leatherland operated 59 mall stores and 13 shops that were open for about 15 weeks before the holidays. But the factors that Mr. Bell said led to Leatherland's bankruptcy were in motion.

The firm's recent bid to borrow $5 million to $6 million to continue operations was spurned by at least six lenders, he explained, because holiday sales were 15 percent lower than projected and the chain could not show enough profit potential.

The store closings and liquidation of the company were approved Friday by a U.S. Bankruptcy Court judge in Toledo.

Suppliers, store landlords, and other creditors, Mr. Bell said, probably will receive less than 10 cents for each $1 he owes them. Such debt totals $9 million to $10 million. An additional $4 million in debt is being disputed.

The firm owes Wood County almost $350,000 in personal property taxes on the inventory in its Ampoint Industrial Park warehouse. Officials had not yet decided how many of those bills - some of which date back to 1999 - will be paid in full and how many will receive pennies on the dollar.

The number of shoppers browsing malls, where Leatherland has all its stores, continued a decade-long decline.

Likely most damaging, however, was market saturation, Mr. Bell said. The economy had been so good in recent years that most people who wanted a leather coat bought one, he said.

Its average coat sale in 2003 was $147, down from $208 in the early 2000s, Mr. Bell said.

Leather Apparel Association fashion director Tricia Kenney said

selling classic leather coats has been tough in the past six months. In addition to battling a shaky economy, micro suede and other fabrics seldom carried by traditional leather retailers have become more popular.

The local firm's largest competitor, Wilsons the Leather Experts Inc., has been hit hard as well. It is shuttering some stores nationwide, including its shop at Franklin Park.

Mr. Bell, who said he hopes by fall to be operating a new group of leather stores, got his start in the business stamping designs in leather belts and selling them at mall craft shows.

Before opening the Southwyck store in 1978, he set up his stand for one-week stints at malls around the country.

Leatherland opened 14 stores in 2001 after several very profitable years. It purchased 25 percent more leather than usual for autumn 2001 delivery when its executives feared that mad-cow and hoof-and-mouth scares would lead to expensive leather if many livestock carcasses were burned in attempts to get rid of the diseases.

But the Sept. 11 terrorist attacks that year helped hold sales to 15 percent lower than Leatherland had predicted for that autumn.

Conducting the closing sales at the stores is a firm created by liquidators Hilco Merchant Resources LLC, of suburban Chicago, and Gordon Bros. Retail Partners LLC, of Boston.

The liquidators' challenge will be selling about 40,000 leather coats for Leatherland before the weather turns warm. Southern stores probably will be closed first, with remaining merchandise shipped north, said Mike Keefe, Hilco president and chief executive. Leatherland has stores in the Chicago, Detroit, and Cleveland areas as well as New York, Florida, Texas, Wisconsin, Missouri, Minnesota, and Kentucky.

About 1,500 coats are at the Franklin Park store now. But that store probably will be one of the last to be closed, Mr. Keefe said. The Franklin Park store is profitable, ranking sixth among the company's remaining stores.



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