THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, October 12, 1996 TAG: 9610120299
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: 51 lines
Financially troubled Best Products Co. has found buyers for its remaining assets, but the retailer's employees and shoppers shouldn't expect the purchasers to be saviors, industry analysts said Friday.
The Richmond-based home furnishings and jewelry retailer, which filed for bankruptcy protection last month, announced late Thursday that it has agreed to sell its assets to two liquidators in a deal worth $395 million.
Initial plans call for Best's 88 outlets and 11 jewelry stores to continue operating after the purchase, Best spokesman Ross Richardson said Friday. But he acknowledged that, in the long term, there's no guaranteeing what the new owners will do.
Industry observers say the traditions of Best Products, a struggling catalog showroom retailer that has filed for Chapter 11 twice in the past five years, won't be resuscitated.
``They're basically out of business,'' said Larry Ring, a retail consultant and business professor with the College of William and Mary in Williamsburg. ``I can't see any compelling reason why (the new owners) would continue to run the stores - at least, not as Best.''
Ring says that in the worst possible scenario, the buyers may liquidate and then close Best's stores. Best has three showrooms and one jewelry store in South Hampton Roads that employ about 175 people. The company has 5,500 employees altogether.
Industry observers say the prospective owners, Schottenstein Bernstein Capital Group L.L.C. and Alco Capital Group Inc., may turn Best's stores into liquidation outlets.
``My guess is that they'll go through the stores and take the bulk of them,'' said Peter Chapman of Bankruptcy Creditors' Service Inc. in New Jersey. ``They'll migrate from the old catalog showroom style to being a closeout warehouse.''
Schottenstein, partly owned by the Schottenstein family of Columbus, Ohio, is one of the Top Three retail liquidators in the nation, Chapman said. Known as ``grim reapers,'' companies like Schottenstein swoop down on bankruptcy retailers to liquidate their merchandise.
Currently, there's so much business in liquidating that companies often pair up to share the load. In the Best purchase, Schottenstein has teamed up with Alco Capital Group, owned by Al Cohen of New York.
Chapman, however, points out that the Schottensteins do more than liquidate merchandise. They also have a majority stake in Value City and American Eagle retail chains through another division, Schottenstein Stores Corp.
The prospective buyers, known for eschewing publicity, could not be reached for comment Friday. Their buyout hinges on approval by U.S. Bankruptcy Court in Richmond. by CNB