Korvettes Inc. plans to close its four stores in the Washington suburbs and all its other stores outside the New York metropolitan area, retailing sources said yesterday.
No timetable has been set for the closings, which will prune Korvettes from a 36-store chain to 18 units, in yet another attempt to make the long-suffering discount chain profitable.
Korvettes is negotiating with several other retailers to take over the stores in suburban Maryland and Virginia. The potential buyers are reported to include K mart Corp. and Woolco, the discount store division of F.W. Woolworth Co.
K mart is considering leasing the Korvettes unit on Rockville Pike, using the first floor for a store and renting out the second floor as offices, according to Discount Store News, an authoritative trade newspaper. The other local Korvettes are at Springfield Mall, Bailey's Crossroads and Langley.
The Washington-area stores employ several hundred workers, whose jobs would be at stake in the closings.
Korvette officials yesterday refused to confirm or deny the widespread reports that stores in Washington and Detroit would be closed. "They are not specifying which stores will be closed, either the total number, the location or the timing," a spokesman said.
The Washington-area stores could remain open for several weeks or months but ultimately will be closed so Korvettes can concentrate on a single market -- New York City -- retailing industry sources said.
Another retailer reportedly is actively negotiating for the Korvettes store in Springfield Mall, the most profitable of the units in the Washington area. That store and the others around Washington may stay open while talks to sell them or on their building leases are underway.
Closing of all the Korvettes outside the New York area -- as well as four stores in and around New York City -- is the latest in a series of retrenchments for what was once one of the biggest, fastest-growing discount store chains in the country.
The closings reportedly are one condition of an usual agreement with Korvettes' biggest creditors. Three banks and an insurance company have agreed to forgive about half of Korvettes' debts in exchange for half the company's profits for the next seven years.
A decade ago, when big suburban discount stores were the new wave of retailing, Korvettes rivaled Woolco ownership and management of the chain changed several times as Korvettes tried several different strategies for improving its sales.
Last year the stores were sold to Agache-Willot, a French retailer, which pumped millions of dollars into Korvettes and tried again to revamp its merchandising approach. Abandoning the "other Korvettes" theme which tried to lure higher-income customers to buy higher-priced merchandise, Korvettes said it was going back to being a discount store.
Turning around the unprofitable chain in the midst of a recessionary slump in sales apparently proved impossible, forcing Korvettes to retrench further.
A few months ago Korvettes closed 14 of its units, but officials insisted the Washington stores were operating profitably and would be kept open and revamped.
At that time, the plan was to try to rent part of the space in the local Korvettes units to some other retailer and reduce the size of the stores. But with retail space going begging in prime shopping centers in the Washington area, no major merchant could be found to move in next to a struggling Korvettes store.
A few days ago Korvettes closed a store near Philadelphia and another in the New York suburbs, and word spread quickly that others would be closed.
The earlier cutbacks included laying off 7,000 of Korvettes' 12,000 employes, and another 2,000 are expected to lose their jobs this time.