News

Times changed, Mervyns didn't, founder says

Merv Morris of Atherton expresses 'great sadness' for affected employees, and gratitude 'for all the good' the stores did

Mervyns founder Merv Morris of Atherton Monday expressed "great sadness for the several thousand employees" impacted by the anticipated closure of Mervyns chain of department stores.

In a telephone interview with the Weekly, Morris also expressed gratitude "for all the good" that came with the stores — known from the time they were founded for their charitable giving to organizations benefiting children and families in communities in which they were located.

Problems that led to the long retrenchment and eventual demise of the chain "started many years ago" and are complex, Morris told the Weekly.

When Morris retired in 1979 he sold the chain to Dayton-Hudson, which in turn sold the stores to a private equity group and concentrated its attention on its lower-end Target stores.

Morris said there was a lack of understanding of how to run a higher-end or traditional department store during changing times.

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"It was a combination of things," Morris said of the chain's demise.

"Economic times changed and, frankly, Mervyns didn't change."

"It did endure for 59 years, which is pretty good for a business these days," Morris said. He and his wife, Roslyn, have resided in Atherton since the mid-1950s.

Hayward-based Mervyns announced late last week that it will shut down its remaining stores following the December holidays. Mervyns had filed for bankruptcy protection in July and announced plans to close 26 stores.

Now its other 149 stores will be closed.

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The company has stores in seven states, including one on Showers Drive in Mountain View.

At the time of the bankruptcy filing, the chain reportedly had about 18,000 employees, although estimates have ranged down to 16,000 current employees to more than 20,000. There was no immediate estimate of how many local employees will be affected.

Mervyns will bring in an outside liquidator to sell its remain stock, according to the website MarketWatch.

"We are disappointed with this outcome, but the company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action," John Goodman, Mervyns' chief executive officer, said in a statement.

"Although we took a number of steps to improve our financial performance, we were unable to return the company to profitability. We appreciate the hard work and loyalty of our store associates, whose continued assistance we will rely upon during our going out of business sales," Goodman said.

"Consumers know Mervyns for our style, quality and great value and we are confident that the deep discounts available through going out of business sales will drive significant traffic in our stores," Goodman said.

A major complication in the end was a lawsuit filed in early September relating to Mervyns Chapter 11 bankruptcy reorganization in July.

The lawsuit, filed in Chicago, Ill., alleges that the chain's real estate assets (locations and below-market-rate leases) were used partly to service the debt from a $1.2 billion leveraged buyout of the chain in 2004.

The Chicago Tribune reported Sept. 5 that the suit alleges that Mervyns real estate was transferred to newly formed companies that imposed a nearly 90 percent hike in rents, which added to a soft economy contributed to the bankruptcy filing. The Tribune reported that in the fiscal year ending Feb. 2 Mervyns lost $64 million on $2.5 billion in sales.

"By separating Mervyns real estate assets from its retail operations, the private-equity players made sure that any residual value or upside in the real estate assets were reserved for themselves and not for Mervyns," the suit alleges. It was filed by Mervyns Holdings LLC and Mervyns LLC against its former private-equity owners and others.

"The 2004 transaction is a transaction that ultimately led to Mervyns bankruptcy and is a fraudulent transfer that cannot withstand scrutiny," the suit alleges, according to the Tribune report.

Those named in the lawsuit include Mervyns Klaff Equity LLC and Lubert-Adler and Klaff Partners LP, a joint venture of Chicago-based Klaff Realty LP and Philadelphia-based Lubert-Adler Management Inc.

"Filing a suit of this nature requires a pretty vivid imagination and a lawyer who is having a quiet week," Hersch Klaff told the Tribune Thursday, the paper reported. Klaff is spearheading a bid for the Chicago Cubs, currently owned by the Tribune Company along with Wrigley Field.

Target Corp., a previous owner of the Mervyns chain, is also named as a defendant. A spokeswoman said Target "emphatically disagrees" with the lawsuit's claims and said the sale was an arms-length transaction with a competitive-bidding process, the Tribune reported.

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Times changed, Mervyns didn't, founder says

Merv Morris of Atherton expresses 'great sadness' for affected employees, and gratitude 'for all the good' the stores did

Uploaded: Tue, Oct 21, 2008, 12:16 am
Updated: Tue, Oct 21, 2008, 12:17 am

Mervyns founder Merv Morris of Atherton Monday expressed "great sadness for the several thousand employees" impacted by the anticipated closure of Mervyns chain of department stores.

In a telephone interview with the Weekly, Morris also expressed gratitude "for all the good" that came with the stores — known from the time they were founded for their charitable giving to organizations benefiting children and families in communities in which they were located.

Problems that led to the long retrenchment and eventual demise of the chain "started many years ago" and are complex, Morris told the Weekly.

When Morris retired in 1979 he sold the chain to Dayton-Hudson, which in turn sold the stores to a private equity group and concentrated its attention on its lower-end Target stores.

Morris said there was a lack of understanding of how to run a higher-end or traditional department store during changing times.

"It was a combination of things," Morris said of the chain's demise.

"Economic times changed and, frankly, Mervyns didn't change."

"It did endure for 59 years, which is pretty good for a business these days," Morris said. He and his wife, Roslyn, have resided in Atherton since the mid-1950s.

Hayward-based Mervyns announced late last week that it will shut down its remaining stores following the December holidays. Mervyns had filed for bankruptcy protection in July and announced plans to close 26 stores.

Now its other 149 stores will be closed.

The company has stores in seven states, including one on Showers Drive in Mountain View.

At the time of the bankruptcy filing, the chain reportedly had about 18,000 employees, although estimates have ranged down to 16,000 current employees to more than 20,000. There was no immediate estimate of how many local employees will be affected.

Mervyns will bring in an outside liquidator to sell its remain stock, according to the website MarketWatch.

"We are disappointed with this outcome, but the company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action," John Goodman, Mervyns' chief executive officer, said in a statement.

"Although we took a number of steps to improve our financial performance, we were unable to return the company to profitability. We appreciate the hard work and loyalty of our store associates, whose continued assistance we will rely upon during our going out of business sales," Goodman said.

"Consumers know Mervyns for our style, quality and great value and we are confident that the deep discounts available through going out of business sales will drive significant traffic in our stores," Goodman said.

A major complication in the end was a lawsuit filed in early September relating to Mervyns Chapter 11 bankruptcy reorganization in July.

The lawsuit, filed in Chicago, Ill., alleges that the chain's real estate assets (locations and below-market-rate leases) were used partly to service the debt from a $1.2 billion leveraged buyout of the chain in 2004.

The Chicago Tribune reported Sept. 5 that the suit alleges that Mervyns real estate was transferred to newly formed companies that imposed a nearly 90 percent hike in rents, which added to a soft economy contributed to the bankruptcy filing. The Tribune reported that in the fiscal year ending Feb. 2 Mervyns lost $64 million on $2.5 billion in sales.

"By separating Mervyns real estate assets from its retail operations, the private-equity players made sure that any residual value or upside in the real estate assets were reserved for themselves and not for Mervyns," the suit alleges. It was filed by Mervyns Holdings LLC and Mervyns LLC against its former private-equity owners and others.

"The 2004 transaction is a transaction that ultimately led to Mervyns bankruptcy and is a fraudulent transfer that cannot withstand scrutiny," the suit alleges, according to the Tribune report.

Those named in the lawsuit include Mervyns Klaff Equity LLC and Lubert-Adler and Klaff Partners LP, a joint venture of Chicago-based Klaff Realty LP and Philadelphia-based Lubert-Adler Management Inc.

"Filing a suit of this nature requires a pretty vivid imagination and a lawyer who is having a quiet week," Hersch Klaff told the Tribune Thursday, the paper reported. Klaff is spearheading a bid for the Chicago Cubs, currently owned by the Tribune Company along with Wrigley Field.

Target Corp., a previous owner of the Mervyns chain, is also named as a defendant. A spokeswoman said Target "emphatically disagrees" with the lawsuit's claims and said the sale was an arms-length transaction with a competitive-bidding process, the Tribune reported.

Comments

what
Charleston Gardens
on Oct 20, 2008 at 5:32 pm
what, Charleston Gardens
on Oct 20, 2008 at 5:32 pm
1 person likes this

blue font?


JD
Los Altos
on Oct 20, 2008 at 5:38 pm
JD, Los Altos
on Oct 20, 2008 at 5:38 pm
Like this comment

The blue font is because they mistakenly have an "open" web link buried in the html code.


Mom
Leland Manor/Garland Drive
on Oct 20, 2008 at 7:47 pm
Mom, Leland Manor/Garland Drive
on Oct 20, 2008 at 7:47 pm
5 people like this

I'm sad that Mervyn's is closing up shop. I actually liked the fact that it didn't change with the times! You always knew when you went to Mervyn's that you'd get decent quality at a decent price. Over the last 19 years I've bought probably 90% of my kids' clothes there, and lots of my own, plus most of my linens. I appreciated Mr. Morris's beneficence (which I think Dayton Hudson continued). I will truly miss shopping there.


another mom
Green Acres
on Oct 20, 2008 at 8:13 pm
another mom, Green Acres
on Oct 20, 2008 at 8:13 pm
1 person likes this

I thought Mervyn's was a gem, too. The value in linens was amazing.


Palo Mom
Duveneck/St. Francis
on Oct 21, 2008 at 12:06 am
Palo Mom, Duveneck/St. Francis
on Oct 21, 2008 at 12:06 am
Like this comment

"...transferred to newly formed companies that imposed a nearly 90 percent hike in rents"

Sounds like our City government's business plan of renting out land to the utility department.


New Orleans Native
another community
on Oct 21, 2008 at 11:36 am
New Orleans Native, another community
on Oct 21, 2008 at 11:36 am
3 people like this

This is so sad. Mervyn's gave me my first job out of college. I was a department manager in the Home Fashions department. I loved the Super Saturdays we use to have and the $1.99 towels that were on sale. Mervyn's was a good company to work for. They had excellent benefits. They will truly be missed.


astute observer
another community
on Oct 21, 2008 at 12:13 pm
astute observer, another community
on Oct 21, 2008 at 12:13 pm
Like this comment

A couple years ago I freelanced at their Hayward HQ. I could see that the patient was sick. It's too bad it fell victim to the short-sightedness exhibited by so many corporations. They were a great place for jeans and trendy clothes at a good price. Oh well, hopefully Kohl's (whom Mervyn's was always looking over their shoulder at) or SteinMart will snap up some of the properties.


larry Smith
Palo Alto Orchards
on Oct 21, 2008 at 12:35 pm
larry Smith, Palo Alto Orchards
on Oct 21, 2008 at 12:35 pm
1 person likes this

Sorry to hear that Mervyns is going under. Does this mean that its CEO, John Goodman, will get a $20 million dollar severance package for doing such a good job? That seems to be the prevailing policy.


chris
University South
on Oct 21, 2008 at 1:24 pm
chris, University South
on Oct 21, 2008 at 1:24 pm
2 people like this

next to go is Circuit City

America's spending splurge is coming to an end


Sad
another community
on Oct 21, 2008 at 1:53 pm
Sad, another community
on Oct 21, 2008 at 1:53 pm
5 people like this

I was an employee of Mervyn's for 28 years, until Target Corp. sold them and my postion was eliminated. I saw first hand what Target did to Mervyn's. Mervyn's assets were used to build new Targets and upgrade their technology. Mervyn's received the old equipment from Target. The stores were not given the funds to upgrade or refurbish, so they became old looking. Mervyn's stores were always busy and had great sales until Target chewed them up and spit them out. Watch out Target - Walmart is on your heels. Mervyn's you will be missed
open open open.........................


concerned
Another Palo Alto neighborhood
on Oct 21, 2008 at 8:05 pm
concerned, Another Palo Alto neighborhood
on Oct 21, 2008 at 8:05 pm
Like this comment

Stop the splurge. Come on you have had it too good for too long. Wasteful, carefree, ignorant, rude, uneducated folks. Your time is here. Watch as things go under, because folks did not plan for the rainy day.

I sincerely hope for a turn around.


mike
Downtown North
on Oct 22, 2008 at 7:02 am
mike, Downtown North
on Oct 22, 2008 at 7:02 am
3 people like this

The clothes at Walmart and Target are of very questionable quality. My wife claims 100% of my clothes came from Mervyn's. Is there a Kohl's near Palo Alto?


Mom
Duveneck/St. Francis
on Oct 22, 2008 at 8:27 am
Mom, Duveneck/St. Francis
on Oct 22, 2008 at 8:27 am
Like this comment

There is a Kohl's in Santa Clara (10 miles): 101S to Lawrence Expressway to El Camino. Exit off Lawrence and Kohl's will be right in front of you. They have a lot of sales, and often 30-40% off. One of those stores where you don't want to buy at regular price because you know it'll go on sale soon. I think it is better than Mervyn's. Right now, they are offering free shipping for spending 75+ online.

There are also Kohl's in Milpitas at the Great Mall (13 miles) or Fremont (10 miles but you'll get hit with the $4 Dumbarton Bridge toll unless you take 237, in which case, go to Milpitas).

Here are the locations as listed on their website: Web Link


Parent
Another Palo Alto neighborhood
on Oct 22, 2008 at 9:26 am
Parent, Another Palo Alto neighborhood
on Oct 22, 2008 at 9:26 am
1 person likes this

Isn't it a shame now that we live in Palo Alto and have to get on the freeway just to buy good quality/good value clothes for our kids. What is that doing for the environment.

We need to get some decent shopping alternatives here in Palo Alto. We don't want 1/2 day shopping expeditions to other cities just to get a pair of jeans and a jacket for our kids.


chris
University South
on Oct 22, 2008 at 1:46 pm
chris, University South
on Oct 22, 2008 at 1:46 pm
3 people like this

The reason there are not inexpensive stores in Palo Alto is that the people who live here have bid real estate up so high that a low-cost retailer can not afford to locate here (unless you are grandfathered like Fry's)


Mom
Downtown North
on Oct 23, 2008 at 11:17 pm
Mom, Downtown North
on Oct 23, 2008 at 11:17 pm
1 person likes this

As I understand it, Palo Alto City Council would not let big retailers in. They turned down Target and others.


Adam Morrison
another community
on Oct 25, 2008 at 4:24 pm
Adam Morrison, another community
on Oct 25, 2008 at 4:24 pm
3 people like this

I'm from Phoenix, Arizona and worked at one of the Mervyn's in town as my first job. They had very competitive wages and the managing staff was incredibly kind. I was sad when I drove past my store and saw the "Everything Must Go" signs. My work there truly developed me as a person and taught me lessons I could not have gained elsewhere. I will miss Mervyn's greatly.


JB
Leland Manor/Garland Drive
on Oct 31, 2008 at 5:56 pm
JB, Leland Manor/Garland Drive
on Oct 31, 2008 at 5:56 pm
4 people like this


I knew something was happening at Mervyn's in early August. I went in to get some plain, conservative clothes for school before we set out for family camp. After camp there was school, and fall would take off like a rocket.

My brands and my department were gone. I did find some of "my" clothes on % off racks. (Later I heard that some of their suppliers were not shipping to Mervyn's any more.) But most of the clothing was casual and years too young for me.

However that day, while I was in the store, there was soft music playing over the speakers. A song with a refrain: "We're closing the store, we're closing the store, .... 'cause we're closing the store." It was astonishing. I commented to a lady near me, but she couldn't hear any music. I was wondering if management were hoping for subliminal suggestion to do its work on everyone before prices were dropped. The background music lacked any recognized singer, band sound, or song for people to pay real attention to.

I have shopped at Mervyn's for at least 35 years. It was our store while the kids were growing up. I can remember perhaps 28 years ago when they even had a yardage department and shoppers could use grocery-style shopping baskets. I had Katy in the kid seat and was fingering the fabrics. I came upon a very gentle grey calico and held it up to Katy's face. She could wear anything! I told her, "My goodness this looks so nice on you. I think you are a little grey child."

To which Katy howled, "But I don't feeow wike a wittow gwey chiowd!"

It was pink and lavender almost until high school.

Good-bye Mervyn's. From now on I'll be the old lady in underwear at the end of the bench.


L


Joey
Charleston Gardens
on Nov 4, 2008 at 8:07 am
Joey, Charleston Gardens
on Nov 4, 2008 at 8:07 am
Like this comment

Circuit City IS the next to go... you'd think being that one of the stores closing is in the back yard of Palo Alto Online, someone would write about it!


Shopper
Another Palo Alto neighborhood
on Nov 4, 2008 at 4:29 pm
Shopper, Another Palo Alto neighborhood
on Nov 4, 2008 at 4:29 pm
Like this comment

Joey

But neither of them bring sales $$ to Palo Alto, so why should we worry. After all, we have all the boutiques to shop in which brings money to our city.


Laid Off Mervyns Associate
another community
on Nov 23, 2008 at 9:16 pm
Laid Off Mervyns Associate, another community
on Nov 23, 2008 at 9:16 pm
3 people like this

I worked for the Mervyns Corporate office in Hayward for almost 30 years until the recent lay off in October. I was reading through all the comments here and wanted to thank you for all your kind words about Mervyns. I really believed in what Mervyns stood for and it is so reassuring to hear that we were able to make customers happy and gave them a place to shop for value and quality.

I really don't have any hard feelings about being laid off, it is just sad that it had to happen and Mervyns had to close as a reault. Working at Mervyns was like working in one big family, we were all close and had built many long lasting friendships.

Unfortunately, I did not get a chance to meet Mervin Morris personally to thank him for all his hard work in making Mervyns what it was and to share my condolenses for its closing this year. I feel bad and as an associate I did all I could to continue the Mervyns "dream". There will always be a place in my heart for what Mervyns meant to me...


concerned citizen, April 2009
Community Center
on Apr 2, 2009 at 10:31 am
concerned citizen, April 2009, Community Center
on Apr 2, 2009 at 10:31 am
1 person likes this

Its nice to reminisce about stories of satisfied shopping at Mervyns but the real story here is of a dark and greedy nature. The corporate owners played a very greedy, clandestine game of restructuring their assets, getting loans to help keep the company open while using that money to buy real estate, then use that real estate to re-channel their efforts in wiping out the retail side of their business. This left them with a nice real estate business,” By separating Mervyns real estate assets from its retail operations, the private-equity players made sure that any residual value or upside in the real estate assets were reserved for themselves and not for Mervyns," the suit alleges". Oh lets not forget a $20 million dollar severance package for John Goodman, all on the backs of its 18,000 employees who ended up out of work and generally unemployable in the current world financial crisis.
Lets not forget to mention those named in the lawsuit include Mervyns Klaff Equity LLC and Lubert-Adler and Klaff Partners LP, a joint venture of Chicago-based Klaff Realty LP and Philadelphia-based Lubert-Adler Management Inc. who after getting rid of all those pesky former retail workers are now spearheading a bid for the Chicago Cubs, currently owned by the Tribune Company along with Wrigley Field.
Altogether not a bad day's work to unload the old company, charge up there other holding's like Target and get rid of all those good quality clothes and Mervyn's employees to enrich their pockets. Just think what they could have dreamed up if they had waited until the elections why they might have been able to get a Fed bail out on top of all the rest of the money they walked away with.
Oh the story is not quite finished. Looks like Mervyns will go online, nice. No more problem's with so many employees and all those employee benefits and so what if they did help to build the company so the owners could run away with all the profits, just another day in the greedy corporate minds.


Former Mervyns Employee
another community
on Sep 9, 2009 at 3:38 pm
Former Mervyns Employee, another community
on Sep 9, 2009 at 3:38 pm
3 people like this

I started working at Mervyns on July 1980 and was an original employee who opened Mervyns #62 San Bernardino. I worked for the company for more than 20 years and held many different positions. In my 23 years with the company it was true that it was a big family where no matter where you went, you would always run into someone who you worked with in the past. I was fortunate to have opened Mervyn's #131 Puente Hills East, Mervyn's #147 Montebello Town Center, Mervyn's #166 Victorville, Mervyn's #289 East Highland/San Bernardino California and was a helping hand with the Grand Openings of Mervyns Whittier, Redlands, Fontana and Palm Desert.

It is a great shame of what happened to Mervyn's. I was lucky to leave the company before the closure and I am sorry to what has happened to all of my friends who have lost everything. To this day I BOYCOTT TARGET for being greety. I will not walk into a Target as long as that company exists. I only hope all of those Loyal Mervyns Employees and Customers will do the same and BOYCOTT Target.

The bottom line is money counts and when Target starts noticing that their stores are being boycott for the shamefull way they got rid of Mervyns I only hope they will fall victim to the same luck.

John Goodman should find a way to return the 20 Million servance package he got and find a way to compensate those employees who's back he broke by accepting that package. I only hope some will do a class action lawsuit againt Goodman, Target and all of the equity partners and have them compensate all of those loyal employees who have lost their homes, cars and savings in today's economy.

Long Live Mervyn's and thank you Mr. Morris for creating Mervyns where the Customer's is First! A concept that seems to be copied by those surviving retailers!


Huh?
Another Palo Alto neighborhood
on Sep 11, 2009 at 9:56 am
Huh?, Another Palo Alto neighborhood
on Sep 11, 2009 at 9:56 am
1 person likes this

"Customer is first"? Hardly. Low end retailers (Wal-Mart, K-Mart, Target, Kohl's) don't put the customer first these days. Most employees are ESL. I have to talk to a manager if I have questions.


Eleni
Palo Alto Hills
on Jan 26, 2010 at 9:52 am
Eleni, Palo Alto Hills
on Jan 26, 2010 at 9:52 am
1 person likes this

For shame, when Mervyns close in Fort Worth, I have been looking for the clothing line French Landry ever since, no where to be found. We have a Khols, Target, and a Kmart near by but, they do not carry French Landry ladies clothing.


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