Loehmann’s closing its last Washington-area store Sunday


Pedestrians walk past Loehmann's department store in the Chelsea neighborhood of New York in 2010. The retailer will close its last Washington-area store Sunday, following tough competition. (Jin Lee/Bloomberg)

Less than a week before closing its doors for good, the last standing Loehmann’s in the Washington area was selling Calvin Klein hosiery for $2.80 and heavy-duty hangers for 5 cents.

“I have been coming here for four, maybe five, major visits every year since 1986,” said Lisa Martin, 53, who browsed the racks for an hour before leaving empty-handed. “I don’t know where else I’ll go.”

Loehmann’s, known for its discounted designer apparel, weathered a 93-year run, one that outlasted the Great Depression and the rapid rise of outlet malls. But facing tough economic conditions and stiff competition from larger competitors, including T.J. Maxx, the retailer is folding.

This week, $100 Missoni sweaters (down from the manufacturer’s suggested price of $550) hung alongside $5 shorts and $28 dresses at the store in Falls Church, which opened nearly 50 years ago and will close Sunday. Outside, workers loaded clothing racks into a cargo van marked Rios Dry Wall & Demolition.

Like Filene’s Basement and Daffy’s before it, Loehmann’s died a long, slow death. The company filed for bankruptcy in 1999, and again in 2011. The final blow came two months ago, after it failed to find a buyer that could keep the company afloat.

In the end, New York-based Loehmann’s was muscled out by its much-larger peers. With 39 stores in the United States, analysts say the retailer had no chance of competing with the TJX Companies, which owns T.J. Maxx, Marshalls and HomeGoods (roughly 3,050 locations), or Ross Stores (1,112 locations).

“They had to compete in a game of scale,” said Howard Davidowitz, chairman of Davidowitz & Associates, a retail consultancy based in New York. “Well, that’s impossible. All of the small off-price operators got destroyed.”

Two years ago, Filene’s Basement and its parent company, Syms Corp., closed their stores after 103 years, citing increased competition and an ailing economy. Daffy’s, a discounter with locations in New York, New Jersey and Pennsylvania, was next, shutting down all 19 of its stores in 2012.

Loehmann’s, which was founded in Brooklyn, N.Y., in 1921, held on a bit longer. But by March, it too will be gone.

The company’s demise comes during a shaky period for retailers. Worrisome retail sales figures have raised fears that consumers will keep a tight hold on their wallets in 2014. Those concerns were exacerbated Thursday when Wal-Mart, the world's largest retailer, reported falling profits and a disappointing outlook for the rest of the year.

Like many retailers, Loehmann’s struggled to stay afloat during the recession. But the biggest blow, analysts say, was the rise of T.J. Maxx. The Framingham, Mass.-based company has created a formidable network of 800 buyers and 16,000 vendors, analysts said. The company’s annual revenue — $25.9 billion in fiscal year 2013 — rivals that of McDonald’s, which posted $28.1 billion in sales last year.

“TJX is the 800-pound gorilla in the room,” said Richard Jaffe, a retail analyst for Stifel Nicolaus. “They have had tremendous success because in this business, size matters.”

There have been other changes, too. Department stores have begun funneling leftover items to spinoffs such as Saks Off 5th, Neiman Marcus Last Call and Nordstrom Rack, making it increasingly difficult for Loehmann’s to secure inventory. The boutique pieces the company had once been known for all but disappeared.

“One of the biggest challenges with off-price retail is that you don’t have a great handle on inventory,” said Sucharita Mulpuru, a retail analyst for Forrester Research. “The model only works when you’re large enough to have buying power.”

In early January, three liquidation firms won rights to sell off the company’s assets, including $65 million worth of clothing and accessories. Going-out-of-business sales began Jan. 9 and are expected to wind down by the end of this month, according to Michael McGrail, chief operating officer of the Tiger Capital Group, which is handling many of the sales.

“The [liquidation] sale has gone very well, and the merchandise has sold very fast,” said Melissa Krantz, a spokeswoman for Loehmann’s. “Every week there have been more and more stores closing.”

Alice Awuah, 33, was shopping with her sister Monday afternoon. The pair left with bags of clothing and purses, including a $3 BCBG skirt and $9 jeans by 7 For All Mankind.

“I was very sad to hear they were closing,” Awuah said. “Very disappointed.”

The Woodbridge resident said she planned to stop by the store at least a few more times before it closed. What she really was waiting for, Awuah said: 80 percent and 90 percent markdowns.

“We’ll miss it,” she said of Loehmann’s. “But there’s always Nordstrom Rack.”

Abha Bhattarai covers local banking, retail and hospitality for The Washington Post’s Capital Business section. She has written for The New York Times, The Wall Street Journal, Reuters and the St. Petersburg (Fla.) Times.
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