`

Gordmans closure to end 139 jobs at Indy-area distribution center

March 14, 2017

Gordmans Stores Inc., which filed for bankruptcy Monday, plans to close a distribution center near Indianapolis, costing 139 workers their jobs.

In a notice to the Indiana Department of Workforce Development, the century-old discount department store chain said it planned to permanently close the center near Clayton, southwest of Indianapolis, on May 12.

The 545,000-square-foot flow-through logistics facility opened in 2014 near Interstate 70 and State Road 39. It’s the only distribution center Gordmans operates outside of its headquarters city of Omaha, Nebraska.

The company said 51 of the employees at the facility are merchandise processors. Another 34 are freight handlers.

Gordmans has one store in the Indianapolis area, in Avon, at 214 Gable Crossing Drive. The 50,000-square-foot store opened in 2012. Elsewhere in Indiana, Gordmans stores are in Lafayette, Fort Wayne, Valparaiso, Mishawaka, Schererville, Clarksville and Evansville.

Gordmans, which has about 105 stores in 22 states, typically has about 100 employees at each of its stores, with a big majority of them working on a part-time basis.

The company, which posted losses in five of the past six quarters, listed total debt of $131 million in Chapter 11 papers filed Monday in Nebraska federal court. Gordmans said in a written statement that it has an agreement with Tiger Capital Group and Great American Group “for the sale in liquidation of the inventory and other assets of Gordmans’ retail stores and distribution centers,” subject to court approval or a better offer.

For now, the chain will operate “as usual without interruption,” CEO Andy Hall said in the statement.

Gordmans, which employs about 5,100 people, is the latest victim in a retail industry suffering from sluggish mall traffic and a move by shoppers to the internet.

The shift has been especially rough on department stores, including regional chains like Gordmans that once enjoyed strong customer loyalty, but even national concerns like Sears Holdings Corp. and Macy’s Inc. have had to close hundreds of locations to cope with the slump.

Gordmans traces its roots to 1915, when Russian immigrant Sam Richman opened a clothing shop in Omaha. He later teamed with a former Bloomingdale’s executive, Dan Gordman, whose car broke down in Omaha en route to California.

Gordman met Richman’s daughter while he was waiting for his car to be repaired and decided to stick around. The two later married.

Private equity firm Sun Capital Partners, which owns Indianapolis-based Marsh Supermarkets, bought the business in 2008 and took it public two years later. Funds managed by Sun Capital hold about 49.6 percent of Gordmans’ equity, according to a court filing.

Growth slowed in 2014, and losses began to mount. Same-store sales fell more than 9 percent in the most recently reported quarter. The company announced job cuts in January, citing the “sluggish retail environment.”

“Like many other apparel and retail companies, the debtors have fallen victim in recent months to adverse macro-economic trends, especially a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics, and expensive leases,” Chief Financial Officer James B. Brown said in court papers.

Around the beginning of March, as the company’s fortunes continued to wane, vendors began to refuse to ship new inventory, Brown said. After entertaining various offers, the company concluded that its best recourse was the liquidation deal with Tiger and Great American.

ADVERTISEMENT

Recent Articles by IBJ Staff and Bloomberg News

Comments powered by Disqus