City Stores Inc., which is attempting to reorganize under federal bankruptcy laws, announced plans yesterday to restructure its operations into two new divisions -- a department store group and the W&J Sloane home furnishings chain.
The proposed reorganization has been approved by the company's creditor committee and now must be approved by a federal bankruptcy judge. The change apparently raises to more prominence within the corporation the Sloane furniture chain. Sloane's is one of the largest retail furniture companies in the Washington area and one of the corporation's most profitable assets.
"It will strengthen the company. It makes us a smaller company, and Sloane's will become a bigger part of it," said Thoma Lehr, controller for W&J Sloane in Washington.
The plan also calls for closing the company's eight Richards discount department stores in the South today, subject to court approval. City Stores earlier had liquidated its Franklin Simon and Hearns stores.
Before it filed for reorganization, City Stores owned or leased approximately 120 stores in New York, the Washington area, Florida, Louisiana, Alabama, Tennessee and Massachusetts. Since then the number has been reduced by more than one-third.
Jack Farber, chairman of City Stores, said that the plan is expected to be "a major step in assuring City Stores' continued capability as a viable entity able to compete effectively and realize its marketplace potential."
The reorganization plan has been approved by the company's executive committee and the company's creditors' committee, but still must be approved by a federal bankruptcy judge.
City Stores filed for protection under federal bankruptcy laws last July, listing assets of $153.3 million and liabilities of $105.14 million. At the time, the company cited "substantial losses" during the previous spring and a "generally poor retail climate" caused in part by gasoline shortages.
City Stores also once operated Lansburgh's, a 113-year-old Washington department store firm that went out of business in 1973.