May 16, 1992, Section 1, Page 1Buy Reprints View on timesmachine TimesMachine is an exclusive benefit for home delivery and digital subscribers. About the Archive This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996. To preserve these articles as they originally appeared, The Times does not alter, edit or update them. Occasionally the digitization process introduces transcription errors or other problems. Please send reports of such problems to [email protected]
The death knell rang for another big New York City retailer yesterday as Alexander's Inc. closed its 11 stores and filed for bankruptcy protection. The budget department store company, merchant to successive waves of struggling immigrants since 1928, said it would reopen the stores for a close-out sale, then cease operations.
The company, which has not turned a profit on its retail operations since 1987, will continue to try to sell or lease its stores, some of which occupy prime real estate locations like the one occupied by the flagship store at 58th Street and Lexington Avenue in Manhattan.
Alexander's demise will hurt the New York economy. The 5,200 employees will lose their jobs, and a significant amount of square footage will flood a real estate market already glutted with empty retail space. The Daily News, in which Alexander's was the second-largest advertiser, will also be hard hit. Shift to Real Estate
Over the last decade, Alexander's managers and owners became more interested in developing the company's real estate and allowed the retailing business to decline, failing to address ever-intensifying competition from new discount stores and price wars that made department-store merchandise less expensive.
At many locations, the Alexander's stores sit in shopping centers where the presence of other large stores may help diffuse the loss. But the damage will be felt strongly in the Fordham Road section of the Bronx, where the Alexander's on the Grand Concourse has anchored a thriving shopping district of smaller shops and ornate movie theaters. Alexander's bought that store, its second, in 1933 and made it the flagship of its chain until the company finally moved into Manhattan in 1963. [ Page 27. ] Outposts in the Suburbs
When its customers began moving out of the city, Alexander's moved with them, establishing beachheads in White Plains and Paramus, N.J., offering middle-class shoppers quality goods at bargain prices.
"With its passing, the Bronx loses one of its distinctions, because even though it moved its headquarters to Manhattan, in the minds of many Bronx residents, it was always a Bronx store," said Lloyd Ultan, a professor of history at Fairleigh Dickinson University who has written four books about the Bronx.
The end of Alexander's highlights the extraordinary difficulties the retail industry has had in the New York area. Some of the proudest names in the business have closed in the last decade -- Gimbels, B. Altman and May's, as well as Ohrbach's, S. Klein and E. J. Korvette. Others, including Bloomingdale's and Macy's, filed for bankruptcy, but survived.
"This is not just an individual story about a retailer fallen on hard times but another very sad part of the difficulties of the whole retail scene in New York City," said Samuel M. Ehrenhalt, regional commissioner of the Bureau of Labor Statistics, a division of the Labor Department.
In its heyday in the 1930's, the Alexander's at Fordham Road and the Grand Concourse boasted more sales per square foot than any other retailer in the country. It was one of the last department stores to cater to the needs and wallets of New York's struggling immigrant and working-class shoppers. It served the Jewish, Irish and Italian communities of the Bronx and northern Manhattan until the mid-1960's when the ethnic makeup of the borough began changing.
Its founder, George Farkas, who named the stores for his father, developed the strategy of finding a niche between discount houses selling hardware and housewares and full-service department stores. "Dad went right in between with decor and ambiance, but with style, fashion and price," Robin L. Farkas, the company's chairman, said at the time of his father's death in 1980. "It had not been done that way before."
With the opening of a third store, in White Plains, Mr. Farkas stayed open in the evening, which no other Westchester County department store did at the time. In Decline Since Mid-1980's
But the company, which sold stock to the public in 1968, has been in decline since the mid-1980's. In its last five years, only when the company sold stores did it have a profit. And sales have dropped to $430 million last fiscal year from $525 million in 1988. Mr. Farkas said losses of the last two years reached $40 million and were expected to continue.
"Alexander's retail business is not viable, and there is little prospect of turning it around," Mr. Farkas said. "It is simply no longer capable of producing the cash flow necessary.
From its unkempt facade to the cheap, no-frills merchandise it sold, Alexander's stood out in the industry, where glitz, glamour and excess predominated.
But in the last decade, the value of real estate increased geometrically, and Alexander's had several pricey pieces of property, including its Roosevelt Field store in Garden City, L.I., and the stores on Lexington Avenue and Fordham Road.
Because high-stakes real estate seemed far sexier and more lucrative than discount retailing, the company neglected retailing. At the same time, an increasing number of competitors -- Kmart, Conway, Conran's and outlet stores -- started chipping away at Alexander's sales.
"For a long time, Alexander's was the alternative to the department stores," said James Posner of Posner Associates, a retail consulting firm. "Now people have lots of alternatives, and Alexander's hasn't given them any reason to continue to shop there."
Mayor David N. Dinkins said in a statement, "This is a sad day for New York City." Mr. Dinkins said he was particularly concerned about Alexander's employees, "the vast majority of whom are people of color and half of whom are women."
Alexander's stopped paying its bills in March, when it announced that it could not meet some requirements of its loan agreements. Since then, it has received little new merchandise.
In its filing with the bankruptcy court, Alexander's listed assets of $183.7 million and liabilities of $95.7 million. Bankruptcy experts say the value of Alexander's real estate insures that its banks, suppliers and even its shareholders are likely to recoup their losses in the long run.
"The trade creditors are, of course, sad to see another good retailer leave the New York scene, but our expectation is that the suppliers will receive 100 cents on the dollar," said Andrew H. Tananbaum, president of Century Factors Inc., a financing company that is one of Alexander's creditors.
Despite its difficulties, the company's board had opted to keep the stores open while Financo, an investment house, shopped them around. The company's two largest shareholders, who between them own more than 50 percent of the stock, are Citibank and Interstate Properties, a New Jersey real estate developer. Too Little Money Coming In
But too little money was coming in, and Alexander's filed for protection under Chapter 11 of the Federal Bankruptcy Code early yesterday morning. The company had been expected to ask for bankruptcy protection last Friday, but the company's directors could not agree on a strategy and delayed the filing.
Investors were not frightened by the prospect of bankruptcy. On Thursday, Alexander's stock closed at its highest price in several months: $12 a share. Trading in the stock was suspended yesterday.
But real estate brokers were wringing their hands yesterday at the thought of hundreds of thousands of feet of more retail space added to the already depressed market. In the heady days of the 1980's, Alexander's was the object of desire for developers like Donald J. Trump, the Bass brothers of Fort Worth and Mr. Roth, who bid its stock up to more than $75 in an effort to buy its properties. The battles these glamorous millionaires fought for control of the proudly plebeian store chain were the top subject of brokers' gossip for years.
"Now who needs that real estate?" said Robert Futterman, senior vice president of Garrick-Aug Associates Store Leasing Inc., a retail real estate company. "When I heard the news first thing this morning, I thought that's the absolute worst thing that could have happened in my market."
The store closings will also swell the ranks of unemployed department store workers in the city. Employment at the city's department stores has dropped 40 percent in the last decade, from 52,000 to 33,000, according to the Bureau of Labor Statistics. The decline has accelerated in five years, when more than 20 percent of the workers in local department stores have lost their jobs.
"I've been involved 34 years in the retail business in this city, and I've never seen it this bad," said Lenore Miller, president of the Retail, Wholesale and Department Store Union. "I don't know where all those people are going to go." Alexander's employees were not represented by a union.
At The Daily News, which is also in bankruptcy, Les Goodstein, vice president of advertising, said the newspaper had been aware of the chain's problems for some time and planned for reduced advertising revenues. "We have budgeted very conservative estimates through the remainder of this year," he said.