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UPDATED: 177-Store Anchor Blue Denim Chain Files Bankruptcy; Closing 50 Stores

Levi Strauss to Acquire 73 of Anchor Blue's MOST Denim Outlet Stores
June 1, 2009
Denim and casual apparel retailer, Anchor Blue Retail Group, and four of its affiliated companies, have filed Chapter 11 Bankruptcy. As of May 28, Anchor Blue listed 177 stores in AZ (17), CA (95), CO (5), FL (18), GA (1), ID (1), NM (8) , NV (5), OR (3), TX (10), UT (7) and WA (7) as open and operating on its website. Click here to download the list of stores in excel format.

Initially, Anchor Blue said it will close 50 underperforming stores that are primarily located in CA, AZ and FL. In its filing, Anchor Blue CEO, Thomas Sands, attributed its need to file bankruptcy to the economic downturn and fall in consumer spending that has seeped into the teen market, as well as the regional weakness of California, where Anchor Blue has the most stores.

Simultaneously with the filing, Anchor Blue announced that Levi Strauss & Co. signed an agreement to acquire 73 MOST stores, Anchor's Blue's denim outlet subsidiary. According to the website of Boca Raton, FL-based private equity giant, Sun Capital Partners (Anchor Blue's owner since 2004), Anchor Blue had 81 MOST stores as of May 28, 2009.

Levi Straus is Anchor Blue's largest unsecured creditor in the bankruptcy case, owed $2.6 million. Anchor Blue listed liabilities between $100 million and $500 million in its filing. The Levis deal is expected to close later this summer and Anchor Blue said it secured approximately $21 million in debtor-in-possession financing from Wachovia Capital Finance to continue operating as normal throughout the bankruptcy process.

"After exploring a number of alternatives, we decided that the most efficient way for us to improve the capital structure of Anchor Blue and sell our Levi's(R) & Dockers(R) Outlet by MOST stores was to pursue restructuring under Chapter 11 protection," said Thomas Sands, president and CEO of Anchor Blue.

In June of last year, Anchor Blue announced a cutback initiative involving the layoff of several managers and the closure of about 40 stores. According to CoStar Tenant, Anchor Blue's stores are typically located in regional malls, average 6,500 square feet, and range in size from 1,000 to 21,000 square feet. For its headquarters and distribution center, Anchor Blue occupies 668,373 square feet on Guasti Road in Ontario, CA.

Anchor Blue was established in the mid-1970s as Miller's Outpost; the company changed its name to Anchor Blue in the late '90s. Sun Capital acquired Anchor Blue from American Retail Group in January 2004 and only 10 months later, put the retailer up for sale with an asking price of $210 million; no transaction surfaced.

This article appears in CoStar's Retail News Roundup: May 31 to Jun 6, 2009, CoStar's weekly column covering expansions, new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales, loans, shopping center development activity, personnel changes, sustainability, green building, and more in retail real estate.

This week in the Retail Roundup, CoStar reports on expansions or new concepts at Topper's Pizza, Apple and PetSmart; new retail development news in TX; acquisition, merger, loan or sale activity at Highwoods, Federal Realty, Weis Markets, Forever 21, Henry S. Miller, SKT Investments, Toys "R" Us, Zumiez, and more; closings, cutbacks, defaults, or bankruptcy news at GM and Chrysler, Stock Building Supply, Oilily, Whataburger, S&K Menswear, and Anchor Blue; personnel or corporate announcements at DLC, ICSC, Studley, and Lincoln Harris; sustainability or green building news at Harris Teeter; and more.
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