Retailers Forever 21 Inc. and Kohl’s Corp. won a joint bid to move into 46 soon-to-be-empty Mervyns stores, the chains said Friday.
Most of the locations are in California, where the mid-level department store chain had a strong presence for decades. The Hayward, Calif., company filed for Chapter 11 bankruptcy protection in July and subsequently decided to liquidate.
The locations to be assumed by Forever 21 and Kohl’s account for about one-third of the roughly 149 Mervyns stores and are presumably among the most desirable locations. Some of the remaining leases may be sold to other retailers later this month, but most of them are expected to be canceled and the properties returned to their landlords’ control.
The deal was negotiated through an auction overseen by bankruptcy lawyers, in which Kohl’s and Forever 21 bid $6.25 million for the right to take over the failed retailer’s leases. If the deal is approved by the court, a portion of that money would go to the company’s creditors.
“We got exactly the stores that we wanted,” said Christopher Lee, senior vice president at Forever 21, which would take over 15 Mervyns sites in 2009 under the proposed deal. “We’ve waited a long time for this, and it finally came for us.”
Lee said the Los Angeles retailer, which promotes itself as a seller of trendy but affordable fashions, planned to convert the locations to the Forever 21 brand early next year.
The move helps the fashion retailer, one of the fastest-growing privately held companies in the area, extend its brand to significantly larger retail spaces. Most of its roughly 430 locations are enclosed in shopping malls, though it does have a few free-standing stores, including a former Saks Fifth Avenue building in Old Pasadena.
The average Mervyns store occupies 80,000 square feet.
“We are pleased with the results of the auction,” Kevin Mansell, chief executive of Wisconsin-based Kohl’s, said in a statement about its acquisition of 31 Mervyns leases. “These locations provide increased presence in under-penetrated markets.”
Figuring prominently in the auction was Macerich, a Santa Monica-based shopping center chain that owns 22 of the 46 Mervyns locations being taken over by Kohl’s and Forever 21.
“Kohl’s will be stronger going forward without the competition of Mervyns,” said Randy Brant, Macerich’s head of real estate. “They competed directly.”
Brant said he expected the retailers to work quickly to convert the former Mervyns stores starting in January and reopening throughout 2009.
Among the planned new Forever 21 locations are Lakewood Center in Lakewood, Los Cerritos Center in Cerritos, Montebello Town Center in Montebello and the Mall of Victor Valley in Victorville.
Sites expected to be taken over by Kohl’s include Stonewood Center in Downey, South Bay Galleria in Redondo Beach and Whittwood Town Center in Whittier.