UPDATE 6/6/08 6:17 p.m." KNOXVILLE, Tenn. (WVLT) -- A company that's been a part of East Tennessee for several generations could be, according to published reports, on the verge of bankruptcy, as the fate of Goody's Family Clothing and its more than 12,000 employees around the country is up in the air.
Goody's may be the latest victim of tough economic times.
The New York Post is quoting unnamed sources, saying a chapter 11 bankruptcy is coming very soon.
If and when it does, Goody's will continue to operate, but some say even if it does find a way to survive, it will never be the same.
The troubled financial road that Goody's has been traveling appears to be headed straight for bankruptcy court. A marketing firm that interviews thousands of consumers every week says that's not a surprise.
American Research Group Chairman Britt Beemer says, "As more and more consumers in the last couple of years have been trying to cut down on the number of stores they've been shopping, I think Goody's has been one of those casualties."
It's a deadly blend of rising costs and competition from super centers like Wal-Mart. With gas prices approaching four dollars, consumers want one-stop shopping. Chapter 11 bankruptcy allows companies like Goody's to continue operating under court supervision while they pay off debts. Companies use the time to reorganize. Experts predict Goody's will have to make major changes just to survive. Changes like consolidating or closing a significant number of stores."
Beemer says, "It's likely if they do come back, they'll have to be a downsized company, because in this day and time, you can't have more than five to eight percent of your stores underperforming in this tough economic period."
Earlier this year, Goody's laid off 4 percent of its corporate workforce here in Knoxville. Two months ago, it closed 20 stores, and that may be just the beginning.
While this is huge economic news around the country, here in East Tennessee it means so much to so many families. Many here grew up in East Tennessee as Goody's grew, too.
Because Goody's has meant so much to so many for so long, Volunteer TV News is giving you a chance to share your thoughts. All you need to do is go leave your thoughts and comments on this story at the bottom of the page. We'll take a close look at the responses, and share some of them with you next week.
KNOXVILLE, Tenn. (WVLT) – We’ve heard about one major Knoxville-based company changing top bosses, closing twenty stores, and laying off 4 percent of the corporate staff two months ago, but everyday this week we've been learning that the money problems at Goody's Family Clothing may have gotten worse.
Neither managers here nor at the offices of Goody's holding company in New York will confirm or deny anything, but the New York Post quotes unnamed inside sources as saying that Goody’s has faced tough competition from Wal-Mart and Target, and the suppliers have stopped shipping product thanks to Goody’s spotty pay record.
That’s especially tough for a company that was formerly family owned.
Donna Wheat is an infrequent Goody's shopper and says, "Probably a lot of the brands that I buy, they don't have those brands."
Wheat offers reason enough why anybody wouldn't shop at any particular store chain regularly, when the store is Goody's.
Dr. Cole Piper is UT’s Executive in Residence and says, "I have a list of friends that worked at Profitt's and now at Goody's. Obviously my heart goes out to them with all the uncertainty they'll be facing."
UT's Executive in Residence says that Goody's has been a lot more of a good neighbor than simply the friendly competitor that he faced more than a quarter century at Profitt's.
Piper says, "We have students every year to market and they allow us to shadow buyers. Sometimes in the course of the day, pretty tough for buyers, but they're willing to do that for students."
There are more than 1,001 Goody’s jobs in corporate, retail and distribution in the Knoxville area alone.
Angie Hewitt is a Goody's Shopper and Madisonville resident. She says, "That's a lot of our friends and family could be losing jobs, so that affects everybody."
Wheat says, "Hopefully they can reorganize."
Chapter 11 could let Goody's keep writing chapters, by closing the books on some debt.
Piper says, "There've been a number of companies that have come out of reorganization and been rather successful."
But for a number of long-term shoppers and Tennesseans, the numbers aren't Goody's most important bottom line.
Goody’s shopper Donna Malone says, "I want Knoxville to succeed. We live here. I don't want to see jobs die and go away."
Chapter 11 bankruptcy, if it comes, would bring big changes to Goody’s, but what will it all mean for the company and its employees in the long run?
Some say Goody’s needs to reinvent itself in order to survive.
Those who follow consumer trends say times have changed, but in many ways Goody’s has not.
Clothing East Tennessee families for decades has created plenty of name recognition for the company, but with so much competition from one-stop shopping super centers like Wal-Mart, and gas prices approaching $4 per gallon, one consumer research expert says the days when shoppers are willing to drive all over town are gone.
American Research Group Chairman Britt Beemer says, "Goody's is going to have to come up with a merchandising strategy that gives comsumers a reason to drive to their store. I think that just being another "me too" or another lower-end apparel store may have worked when consumers have the luxury of shopping and browsing."
Beemer says his research shows that even those who know about Goody’s seem to think of it in past terms, as a place they used to go with their parents.
He says that will have to change if the store has any chance.
But Beemer says marketing and merchandising changes are unlikely to prevent further store closings or consolidations. Those are the difficult decisions Goody’s will have to make, if and when the chapter 11 reorganization moves forward.
The Post reports that the more-than-350-store chain has been dealing with a "business downturn" since going private in 2006. The downturn included cost cuts, store closings, and lay offs, the paper says.
An official bankruptcy filing is expected by next week, but could come as early as Friday, according to The Post, which cites unnamed sources.
Goody's has been seeking debtor-in-possession financing during the past week, The Post reports. DIP financing is "financing arranged by a company while under the Chapter 11 bankruptcy process," according to Forbes' Investopedia.com.
The Post says most of Goody's suppliers have stopped shipping merchandise to the company's stores, because payments to creditors have been "spotty for more than a month now."