Manager optimistic business will be purchased
Employees of the Madras Factory 2-U -- a fixture in Madras for the past 14 years -- learned Thursday that all 172 stores in the chain will be going out of business.
If the business closes, it will be the third major business loss to the community in just over a year. On July 25, 2003, Hatfield's Department Store closed its doors, and in late October, Satterlee's Jewelers closed its Madras business and opened one in Redmond.
Although the Factory 2-U company had filed for Chapter 11 bankruptcy protection in January, last month, a consortium of several groups offered $28.5 million to purchase the chain, which has stores in seven states. On Thursday, the U.S. Bankruptcy Court in Wilmington, Del., approved the acquisition company's offer.
Going-out-of-business sales began at all stores, including the Madras store, on Friday.
Tammy Relling, manager of the Madras store, learned of the sale on Thursday, the same day the company sent out a press release to all areas affected by the purchase. By Friday, she had received the signs to place in the store's windows, and the liquidation had begun.
"Buyouts are done day in and day out," said Relling, who is optimistic that the Madras store will remain open. "Business goes on as usual."
The San Diego-based Factory 2-U will sell its assets to Factory 2-U Acquisition LLC, a company formed by an affiliate of National Stores Inc. of Gardena, Calif., The Alamo Group, of Seguin, Texas, Garcel Inc., of Woodland Hills, Calif., and The Ozer Group LLC, of Needham, Mass.
"Eighty to 90 stores, after the going-out-of-business sales, will be picked up by National Stores, and will be run as a going concern," said Frank Morton of Needham, Mass., the managing director of The Ozer Group.
A "going concern" is a business concept which means that a company or store has the ability to pay its debts.
On Friday, Morton said he did not know if the Madras store might be one of the stores picked up by National Stores.
"No decisions have been made on any stores as of yet," he said.
Morton said that National Stores will look at whether or not a particular store fits its "financial economics," before making a decision. "As soon as the decision is made, a communication will go out," he added.
"In the short term, customers are going to get some good deals," he continued, noting that stores will remain open until inventory is sold.
"The sale is going to be relatively short because of the values offered," he predicted. "I would think it would be weeks rather than months."
With 7,500 square feet of selling space, the Madras store is about half as large as most Factory 2-U stores. It employs 12 people -- about half the average number employed by other stores.
Nevertheless, business has been brisk at the local store, which offers apparel and home-related merchandise at 20 to 50 percent below national discount chains.
"We're in our back-to-school season," said Relling, noting that the off-price store offers clothing for the family, snacks, toys, bed and bath supplies, and a complete line of home decor.
For back-to-school wear, the Madras Factory 2-U has many name brands, including Dickies, Polo Sport, Converse, Sketchers, South Pole, Paco, JNCO, and Norton/McNaughton, among others.
"We service all of Jefferson County, plus people come from Prineville, Redmond, Bend, Morrow County, and tourists from Portland," Relling pointed out.
The store is open every day of the year, except Christmas, from 9 a.m. to 9 p.m., Monday through Saturday, and 10 a.m. to 7 p.m. on Sunday.
Relling said Friday that she had received mixed reactions from customers about the liquidation. "Some people are really happy to shop and get good deals, and other people are really sad, because they know the outcome," she said.
She remains hopeful that the local store will be picked up by National Stores Inc.
"I'm optimistic that they're going to look at us and say, `There's a need here,'" said Relling.