Camera Giant's Focus Falters
Tuesday, February 24, 2009
After 91 years of steady growth that turned it into the nation's largest photography retailer, Ritz Camera is under pressure from the digital age, plummeting consumer confidence and one of the worst financial slumps in generations.
The privately held Beltsville-based company filed for Chapter 11 bankruptcy protection in Delaware on Sunday after suffering losses in all of its core businesses: camera sales, photo processing and the Boater's World Marine Centers chain it operates.
Ritz Camera, still run by the family that established it as a portrait studio in Atlantic City in 1918, grew into a retail giant with 800 stores in more than 40 states by gobbling regional photography chains. But the recession has put tremendous pressure on the company, which already was struggling to rebuild sales after consumer interest switched from film to digital products.
Company officials yesterday did not respond to inquiries on whether the filing would prompt the shuttering of any of its 51 Washington area stores or whether any of its 6,424 employees would be laid off.
Ritz joins several other large retailers, including Linens 'N Things and Circuit City, which have filed for bankruptcy protection. But unlike Linens 'N Things, which went out of business, and Circuit City, which is closing next month, Ritz, according to its filing, plans to restructure "to preserve the possibility of being able to . . . continue as a going concern."
Like other retailers with big-ticket products, Ritz faced losses in boating supplies and cameras last year when consumers dramatically curtailed their spending. Moreover, Ritz operates largely in shopping malls, many of which have experienced sizable declines in foot traffic.
The camera business "is very competitive with bigger retailers like Best Buy and Wal-Mart offering better prices," said Mark Millman, president of Millman Search Group, a Baltimore-based retail-consulting firm.
According to the bankruptcy filing, the company's profits in film processing were also hurt by the shift to digital photography.
Ritz, like other photography stores, introduced new products and services, including printing photos that customers uploaded, creating photo collages and posters. But "digital photography is not increasing at a rate fast enough to offset the decline in film processing," said Gary Pageau, a publisher at the Photo Marketing Association. "A lot of retailers are investing in other processing services, but they have not replaced film-processing revenue."
Pageau added that industry-wide camera sales dropped to 28.2 million last year from 29.4 million in 2007. They are projected to fall to 25.9 million in 2009, he said.
Ritz said its annual sales as of November were under $1 billion.
In its bankruptcy filing, the company said it is seeking a credit facility of $85 million to cover payroll and operating expenses. The company listed more than 30 unsecured debtors, including Nikon, which is owed $26.6 million; Canon USA, which is owed $13.7 million; and Fuji Photo Film, which is owed $4 million.