By V. Dion Haynes
Washington Post Staff Writer
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.
The company appointed Marc C. Weinsweig from FTI Consulting as its chief restructuring officer. Weinsweig did not return several phone messages yesterday seeking comment.
The camera company began when Benjamin Ritz opened a portrait studio on the Atlantic City boardwalk in 1918. The business expanded in 1938, when Ritz's younger brother, Edward, established a photo processing lab at 11th and G streets NW in the District. The following year, the brothers set up shop in Baltimore and began selling cameras.
Ritz Camera expanded under Edward's son, David, who joined in 1969 and now serves as chief executive. In 1976, the company purchased Fotomat, doubling its store numbers to 100. In 1997, it bought 130 stores from Seattle-based Kits Camera, then the nation's third-largest retail camera chain. Ten years ago, the company added another 73 locations when it purchased the Philadelphia-based Camera Shop.
In 2001, the company acquired Wolf Camera from Charles R. "Chuck" Wolf, Edward Ritz's nephew, in a bankruptcy sale.
In the late 1980s, David Ritz, a boating enthusiast, opted to diversify by establishing Boater's World.
Boater's World sales plummeted when the price of gas rose last year, according to the filing.
"People aren't putting money into the boating industry," Millman said. "It's more important for them to feed their families and pay their mortgages."
Industry-wide, power boat sales dropped an estimated 28 percent in 2008, said Ellen Hopkins, spokeswoman for the National Marine Manufacturers Association.
Boater's World is not a powerboat retailer, but sells fishing gear, paddleboats, inflatable boats and powerboat accessories, such as deck chairs and navigational gear.
"If people aren't buying boats, Boater's World won't have customers coming in to buy their products," said Phil Keeter, president of the Marine Retailers Association.
The bankruptcy filing said Ritz in October 2007 received $200 million in a revolving credit facility from Wachovia Bank and other lenders. The document said Ritz owes them $47.7 million in revolving credit and $6.8 million in credit obligations.
Staff researcher Meg Smith contributed to this report.