Ritz Camera Warns of Possible Liquidation
Thursday, July 9, 2009
Ritz Camera, the ubiquitous national photo chain that got its start as an Atlantic City portrait studio 91 years ago, said yesterday it is unable to raise the cash it needs to operate through the summer.
The Beltsville-based firm, a victim of the economy and changing technology, has been attempting to reorganize since it filed for Chapter 11 bankruptcy protection in February. The company said in court documents yesterday that it now hopes to sell its assets.
The documents, filed in the U.S. Bankruptcy Court in Wilmington, Del., say the company has been negotiating with two potential bidders who would take over all of its 370 stores. The company asked to schedule an auction for July 20.
If the effort to sell the company is not successful, according to the filing, Ritz is seeking permission to liquidate and close by July 24, to avoid paying $3 million in rent going into September.
The company already has shuttered about 400 stores and shut down its Boater's World Marine Centers. Retail analysts attributed the action to a dramatic decline in consumer spending for items such as cameras and boating gear as well as the marketplace's switch to digital photography, which is making photo processing obsolete.
The company is run by chief executive David Ritz, who dramatically expanded the chain after taking over the family business in 1969. David Ritz's father and uncle each ran separate photo businesses that later merged -- his father started his studio in 1918.
Ritz, through a spokesman, declined to comment.
The Ritz family "took a small business and grew it into a huge one. It's had a tremendous heyday, with tremendous growth," said Mark Millman, president of Millman Search Group, a Baltimore-based retail consulting and executive search firm.
"I'm surprised they couldn't make a go of it with the remaining stores," Millman added. "They were able to discard the most unprofitable stores and were left with the best and brightest stores."
Millman said a sale could be difficult because many of the 370 remaining stores are located in malls with high rents and declining foot traffic.
Gary Pageau, who publishes a magazine for the Photo Marketing Association, called Ritz an innovator in the industry who pioneered one-hour photo processing and several products, including photo books that are printed in the store an hour after a consumer sends digital images online. "He was able to build two national chains," Pageau said. "What they've done has never been done before and will never be done again."
According to the filing, Ritz "may not have sufficient availability to continue operating through the summer as a standalone entity and to purchase inventory required for the fall holiday season. " As a result, the company "believes that the time to maximize value through a sale process is now."
Tiffany Hall, a former employee of the Ritz store at 18th and L streets in Northwest Washington, said she isn't surprised by the store's troubles. She said she worked for Ritz for 10 years, mostly in Florida, and left shortly before the company declared bankruptcy in February.
Hall, who stopped in the store to get some wedding prints, said many photographers simply are not printing as many photos any more. Now, photographers can upload and e-mail the images digitally, or just print out the one or two they want, she said.
Staff writer Ylan Q. Mui and staff researcher Eddy Palanzo contributed to this report.