Linens ’n Things retail stores disappeared from shopping centers coast-to-coast after the chain went bankrupt and liquidated its stock, but the familiar brand is about to be revived after a joint venture bought the name for $1 million.
Two liquidation firms, Hilco Consumer Capital, a private equity firm in Toronto, and Gordon Brothers Brands, based in Boston, purchased the name and other intellectual property on Feb. 6 after Linens ’n Things closed its 589 stores. Besides the chain’s brand name, the sale included its bridal and gift registry businesses, Internet domains and store consumer brands.
Shopping center landlords who may be anticipating a return of their old tenants will be disappointed, however — at least for now. According to Stephen Miller, co-president of Gordon Brothers’ retail division, the short-term plan is to operate only an online service using the old Web site, www.lnt.com. The site is expected to be relaunched within 30 days, says Miller.
A transitional landing page up and running on the site notes that products offered under the new management will be similar to those available under the previous owners, including home textiles, housewares and accessories.
Brick-and-mortar stores may be established in the future, but that hasn’t been decided yet, says Miller. “[We’re] evaluating future strategic partners [and] considering a store-within-a-store strategy.” The joint venture is negotiating with several parties that could potentially run the new stores, should the joint venture give the go-ahead to establish them.
“We are evaluating wholesale direct and retail direct opportunities on all brands,” says Miller. He adds that supply-chain issues in the market are creating an opportunity for the new textile outlets.
Miller did not comment on whether new industrial warehouse facilities will be built, or if previous facilities will be used as part of the new company’s product distribution system.
Linens ’n Things filed for Chapter 11 bankruptcy protection from its creditors in May 2008, but it was unable to successfully restructure and emerge from bankruptcy. Part of the problem was the inability to get adequate financing to cover operating costs while it restructured.
Hilco Real Estate, part of the large Hilco Trading Co., based in Northbrook Ill., helped the chain close hundreds of stores. Hilco acts as a consultant in bankruptcy cases and advises retail firms on how to avoid bankruptcy or cushion the blow, according to Greg Apter, president and principal of Hilco Real Estate.
Linens ’n Things reported sales of $2.8 billion in 2007, and despite the chain’s bankruptcy, many of its exclusive products remain popular with consumers, although the product line is currently unavailable. Before its inventory was liquidated, Linens 'n Things was the second largest specialty retailer of home furnishings and accessories in the U.S. with 589 stores.
A committee of Linens ’n Things creditors kept 25% ownership of the name and will receive a portion of profits from its use.
Besides the Linens name and intellectual property, Hilco Consumer Capital and Gordon Brothers have invested in other popular brands, including The Sharper Image, Ellen Tracy and Bombay Brands. Part of the strategy in purchasing the brand names is to license their use for potential profits.
Purchasing the intellectual property rights to a defunct retail company can be a highly lucrative strategy. In October, The Sharper Image signed a $540 million, five-year licensing agreement with HoMedics, a manufacturer of personal health products.