Garfinckel's Inc., the Washington institution that symbolized elegant retailing for 85 years, filed for bankruptcy protection yesterday, falling victim to a devastating combination of fierce competition, heavy debt and a decade of zigzagging strategies.

At least seven of the chain's nine stores are expected to be closed before Labor Day, including its flagship downtown store on F Street NW, and all of its stores in Maryland and Virginia.

Most of its 875 employees eventually will lose their jobs. Store executives fired close to 200 employees yesterday before the retailer opened for business, with most of the dismissals at the downtown headquarters.

"This is a loss of unparalleled measure and the end of an era in Washington," said Michelle Bussard, executive director of the D.C. Downtown Partnership, a coalition of politicians, developers and community groups.

Store officials have hired a liquidation firm and requested permission from the D.C. bankruptcy court to carry out a massive going-out-of-business sale that could soon put $22 million of merchandise up for grabs at 50 percent off.

"It has become increasingly apparent over the past six months that Garfinckel's did not have the economies of scale, given its reduced revenue base and market share since 1987, to be a competitive retailer in this marketplace," said George P. Kelly, Garfinckel's chairman and chief executive.

"Changing ownership five different times since the early 1980s subjected Garfinckel's to different merchandising strategies so that its image among customers became significantly impaired," he said.

Garfinckel's Inc., owned by a group headed by Middle Eastern financier Wafic Said, said in bankruptcy papers that it had $80.6 million in assets, including $35 million due from its holding company, and $74.4 million in liabilities. Despite this excess of assets over liabilities, the firm chose to file for protection from creditors under federal bankruptcy law because it was losing about $2.5 million a month, sales were declining and the chain was running out of cash. Garfinckel's recorded $60 million in sales last year, a drastic decline from the approximately $100 million it had once garnered annually.

Sources said Sifcorp, an investment company controlled by Said -- who also owns a major stake in troubled Washington Bancorporation -- invested more than $50 million in Garfinckel's over the past three years. Sifcorp, which said it expected to lose its entire investment, was the only investor to hold more than a 20 percent ownership stake in the firm.

In its heyday, Garfinckel's was Washington's most brilliant retail jewel, the favorite store of the city's rich and powerful. But the dowager of local retailing, founded by Julius Garfinckel in 1905, has been aging swiftly of late, losing its customers to more vibrant and fetching stores that have opened here in the last decade, such as Seattle-based Nordstrom and Macy's of New York.

Yesterday, in the face of the bankruptcy news, the store tried to put on its best face to the public. Throughout the downtown store, business was conducted as usual by Garfinckel's patrician salespeople.

But their composure broke down at the employees' entrance, where many who had showed up for work less than two hours before left without jobs. Store workers cried and commiserated over the sad news as they left the emporium, where many had worked for decades, for the last time.

Employees will be paid more than $500,000 in back wages, a payment approved by the bankruptcy court yesterday. While employees said it was unclear whether any Garfinckel's stores would remain open, the company said that if it were able to obtain additional financing, it would operate a drastically streamlined business, likely keeping its two small stores in the District on Connecticut Avenue NW and in the Georgetown Park Mall.

Under its Chapter 11 bankruptcy filing, Garfinckel's sought protection from creditors while it tries to reorganize its operations and develop a new business plan that would enable it to keep the two stores open. Such a plan would require the approval of creditors and other parties, including the bankruptcy court.

Garfinckel's, whose precarious state has been the talk of Washington's retail community for years, has plenty of company among ailing retailers.

The giant Campeau Corp., parent of Bloomingdale's, filed for bankruptcy earlier this year. And the Richmond-based Miller & Rhoads retail chain, which once was owned by Garfinckel's, recently closed its doors.

What all of these retailers had in common was enormous debt that they had taken on during the 1980s in connection with highly leveraged takeovers.

One of Garfinckel's largest creditors is First City Bancorporation of Houston, which is run by Robert Abboud, a close friend of Said's.

Garfinckel's owes First City about $30 million. To keep operating, Garfinckel's filed an emergency motion in bankruptcy court to get an additional $3.8 million from First City.

According to sources, Garfinckel's has been planning the bankruptcy proceedings since earlier this year. According to bankruptcy documents, the store's board of directors met in a special meeting Tuesday and decided to take action. Some creditors were alerted on Wednesday.

A spokeswoman for Garfinckel's said the bankruptcy action was taken to stem the growing dissatisfaction of suppliers, who are owed about $5 million and had sharply reduced the credit they were willing to extend to the store.

Chairman Kelly and a few top executives will stay on to lead the restructuring, according to a company spokeswoman.

Garfinckel's grew from a single downtown Washington store to a retailing dynamo.

In the ensuing years, Garfinckel's added the prestigious Brooks Brothers and Miller & Rhoads chains.

The entire company was purchased by Allied Stores Inc. in a hostile takeover in the early 1980s.

In 1986, the Canadian Campeau Corp. bought Allied. The following year, Campeau sold Garfinckel's for $95 million to Raleigh Stores Corp., with Said participating as the major investor in the debt-driven buyout.

The 1987 sale to Raleigh Stores Corp., managed by Neal J. Fox, was considered by many to be the final blow.

Fox tried to give Garfinckel's a more upscale image, and store executives blame the plethora of merchandising strategies for Garfinckel's loss of customers.

In 1988, Said and other investors pumped in additional funds, replaced Fox and brought in Kelly, a respected retailing executive. Fox was listed as one of the unsecured creditors; Garfinckel's owes him $364,000.

The bankruptcy is likely to have profound implications for the plans to revitalize downtown Washington and similar attempts by historic Alexandria.

"It drastically affects the notion of getting a critical mass of customers down here that allows everybody to do equally well, and how we are going to fill the void is anybody's guess," said Bussard, of the D.C. Downtown Partnership.

Garfinckel's bankruptcy was greeted with sadness by most in the Washington retailing community, though few were surprised.

"It's such a sad, emotional thing, but it is just not Garfinckel's anymore," said Hanne M. Merriman, former Garfinckel's president and now a retailing consultant. "But with all the changes and debt, it just couldn't merchandise its way out of it in this very competitive market."

At a morning hearing, Garfinckel's bankruptcy attorney outlined future plans for the store: "Management has hopes that some part of the store can be spun off into a much smaller, much leaner Garfinckel's," said Steve Leach, an attorney with Tucker, Flyer, Sanger & Lewis.

But most retail analysts doubt Garfinckel's will survive at all.

"Garfinckel's was one of the most elegant stores in its heyday," said Kurt Barnard, publisher of Barnard's Retail Marketing Report. "But it died many years ago, only they did not know it."

Staff writers Joe l Glenn Brenner, Anne Swardson, Sharon Walsh and researcher Rob Thomason contributed to this report.