Shipley’s Chain to Shut Down : Apparel: After losing their prime supplier, Levi Strauss & Co., the owners decided they will close the stores and terminate about 150 employees.
For more than two decades, Shipley’s Family Clothing stores combined its folksy appeal and civilized prices with Levi’s jeans to hold its own against the Gaps and Miller’s Outposts of the world.
But on Tuesday, Shipley’s owners said they are shutting down the 10-store chain and terminating about 150 employees after a liquidation sale because their prime supplier, Levi Strauss & Co., was cutting it off. Without Levi’s, they said, the chain cannot survive.
The decision underscores the lifeline relationship that some retailers face with key suppliers: no merchandise, no store.
“Levi’s accounted for more than 40% of our stores’ business and if you look at indirect sales . . . it stands for more,” said David Fleming, president of parent Shipley Industries Inc. in Huntington Beach.
The chain, which had revenue of $11 million in its most recent fiscal year, ran afoul of a Levi Strauss policy that forbids resales to wholesalers or other dealers. Shipley’s denied violating the policy.
Levi Strauss decided to end its relationship with Shipley’s in August, Fleming said. After a few months, Levi Strauss had reversed its position. It decided to allow shipments after Shipley’s met new credit and management conditions. The jeans maker had another change of heart last month, however, and the ban was reimposed.
Shipley’s has sued Levi Strauss over the decision and the matter is scheduled to be heard in April. A Superior Court judge recently denied a temporary injunction that would have forced Levi Strauss to continue shipping merchandise.
“We made every possible effort to forestall this action and its consequent hardship on those valued employees,” Fleming said. Employees will stay on the job for the liquidation sale, which starts Friday and runs through March.
John Onoda, a Levi Strauss vice president, said the San Francisco-based casual apparel maker has a strong “no wholesaling” policy that is made clear to its retailers. The policy is strictly enforced to avoid sales in unauthorized outlets that might sully its image, such as at swap meets and other super-discounters. At such venues, the company lacks control over how the merchandise is presented. He declined, however, to comment directly on the Shipley’s case because the matter is being litigated.
Shipley’s began as a wholesale clothing vendor in Los Angeles in 1972. It opened its first retail outlet in Long Beach in 1978 under the name the Joint. “It seemed like a good name for the ‘70s,” said Fleming, stepson of founder Fred Handal. The idea expanded into Orange County, attracting a loyal following.
Because of the current problems, the stores in Costa Mesa, Placentia, Tustin and Long Beach have already closed. The remaining stores are in Laguna Hills, Huntington Beach, Los Alamitos, Orange, Anaheim and Lakewood.
At the flagship Huntington Beach store, manager Ray Ross was busy supervising the 50% to 80% markdowns in preparation for the liquidation sale--where no item will be sold for more than $20; consoling emotional employees, and tending to his last duties as the corporate advertising manager. He said he didn’t have time to grieve.
“I feel kind of confused but it’s nothing that can’t be worked out,” said the veteran of 40 years in retailing.
Ross knows so many customers that he said he had to buy a second Christmas tree last month to lay out all the presents they gave him--from homemade ravioli to bottles of amaretto. He points to advertisements on the wall in which favorite customers and sales clerks model the clothes. Some of them, he said, have gone on to become professional models or actors.
He calls them his “kids” or his “grandkids” and he pledges that the store was a success because of superb customer service. “No one leaves the store without a smile.”
Customers said they, too, will miss Shipley’s. “I’m going to be sad,” said Carma Dahl of Fountain Valley, a mother of six who has two children working in the store. “I like their type of clothing. They have been very competitive.”
Steve Brown of Yorba Linda, who was trying on Sperry Topsiders marked down to $20 a pair from about $70, said “It’s a shame to see the small guys losing out to the big guys.”
Shipley Industries At a Glance: * Corporate headquarters: Huntington Beach * Founded: 1972 * History: Began as a wholesale clothing vendor in Los Angeles, shifted its operations into retail stores in 1974. Ventured into its first retail outlet in Long Beach in 1978 under the name the Joint. It later opened its flagship store in Huntington Beach under the name Shipley’s Family Clothing. * Founder: Fred Handal, retired as president in 1991. * Corporate officers: David Fleming, current president and chief executive, was company’s vice president from 1986 through 1991. * Nature of business: Operates Shipley’s Family Clothing retail stores; 40% to 50% of its sales are Levi’s apparel products such as 501s, jeans and Dockers. Was Levi Strauss & Co.’s 1987 retailer of the year. * Employees: 180 * 1992 sales: $11 million for the fiscal year ended Jan. 31, 1992. * Store locations: In Orange County: Anaheim, Huntington Beach, Laguna Hills, Los Alamitos and Orange. In Los Angeles County: Lakewood. * Stores already closed: Costa Mesa, Placentia, Tustin, Long Beach. * Liquidation date: Friday. Sales will be conducted in the Anaheim, Huntington Beach, Laguna Hills, Lakewood, Los Alamitos and Orange stores.
Researched by DALLAS M. JACKSON / Los Angeles Times
