The Baldwyn-based retailer is seeking Chapter 11 protection in an effort to reorganize for the second time in nine years.
As positive as the local jobs scene was in 2015, this year has opened with news that at least one major area employer is struggling to the point its very survival is at stake.
Baldwyn-based Hancock Fabrics filed for Chapter 11 bankruptcy protection on Tuesday. It’s the second time in nine years that the company has sought to reorganize its business in an effort to get a handle on financial losses and debt. According to the filing made with the U.S. Bankruptcy Court in Delaware, Hancock owes about $110 million to banks and vendors, while it has roughly $100 million to $500 million in assets.
The company has struggled to reach profitability in the past decade. A disappointing fourth quarter of 2015 – holiday retail sales were $8 million less than the company expected – coupled with increasing pension plan expenses and a reduction in its borrowing cap led to Tuesday’s filing. Revenue for the company fell 5 percent last year to $269 million, meaning the company will post another annual loss.
Hancock Fabrics employs about 4,500 employees, with about 350 employees working at the Baldwyn headquarters and distribution warehouse. A company official declined to give The Baldwyn News a definitive local employee count Tuesday, and said she was not at liberty to discuss any of the events surrounding the filing. She additionally said she could not speak of how or if the filing would impact the employee count in Baldwyn.
In the court documents, Senior Vice President Dennis Lyons said the company is looking to close at least 70 underperforming stores, leaving it with just under 200 stores and “a smaller, more profitable core group of stores.”
One of the retail stores set to close is the Tupelo store, which had been seen as the company’s flagship retail location. The store had been used in years past to test retail concepts for other stores throughout the chain.
Hancock officials said they are seeking a buyer for the remaining stores. The bid deadline is March 9. If no one submits a bid, the company may have to opt for a backup bid from the company helping to handle the liquidation of the 70 stores being closed.
