Utilities:
157-year S.F. retailer still seeking a buyer
Lawmakers skeptical about governor’s proposal to limit financial liability.
Gump’s, a 157-year-old San Francisco retailer, is seeking court approval for a “store closing sale” that would end by Dec. 31, according to bankruptcy filings this week.
A Gump’s spokesman said the company was still seeking a buyer to continue business operations, but its store at 135 Post St. near Union Square will close by the end of this year if a buyer isn’t found.
Gump’s filed for bankruptcy protection on Sunday and hired Hilco Merchant Resources and Gordon Brothers to liquidate its merchandise.
The company, which was founded in 1861 and sells home decor and furnishings, apparel and jewelry, has been seeking financing or a sale since May. Gump’s hired financial adviser Lincoln International and signed nondisclosure agreements with 40 prospective investors and 10 prospective lenders, according to a court filing by Tony Lopez, Gump’s chief operating officer.
No sale has been completed to date because of the store’s “lack of liquidity and overburdened capital structure,” Lopez wrote. Gump’s lost $5 million in 2016 and $5.6 million in 2017, requiring loans to stay in business. All prospective sales to date are also “contingent upon raising additional capital, whether as debt or equity,” Lopez wrote.
Gump’s survival as a retail store is “highly unlikely,” said
Gary Kaplan, a bankruptcy lawyer at Farella Braun + Martel, which isn’t involved in the Gump’s case. He said the company’s failure to reach a deal in the past few months and its plans to liquidate merchandise is a sign of its desperate financial situation.
“Once you get to the level that you’re bringing in the Gordon Brothers of the world ... that means you’re done,” Kaplan said, referring to the liquidator Gump’s hired. “It would be very difficult for them to turn it around.”
The company listed assets that included store and catalog inventory worth $25.5 million at retail value, but with a lower liquidation value of $8.6 million. Other assets included store furniture and intellectual property estimated at a value of $1.3 million to $1.6 million. Debts to three major lenders totaled $16 million.
Cate Murphy remembers visiting Gump’s in the 1950s and 1960s. Murphy, 71, who was born in San Francisco and grew up in Napa, would save up to buy exotic, high-end furnishings. Her friends did, too, especially when they got married.
“Everyone used to register for their china and crystal,” she said. “I spent my hard-earned salary on Christofle silver.”
Murphy remembers buying a bowl shaped like a lotus petal and a Chinese dowry wooden chest. “I splurged,” she said. Gump’s would also host puppies and kittens in the store for adoption through a partnership with the Society for the Prevention of Cruelty to Animals.
But now Murphy rarely shops at Gump’s. Her most recent purchase at Gump’s came last Christmas, when she bought an ornament for under $10.
“I blew all my money on art and jewelry,” she said. “I don’t need any more junk.”
Her niece doesn’t want to inherit her Gump’s porcelain, Murphy said, because of the hassle of dusting.
Helen Bulwik, a retail consultant and former Gump’s board member in the 1990s, blamed Gump’s outdated merchandise for its struggles.
“They have focused on a much older customer. That makes it very difficult as opposed to evolving with current home furnishings trends,” she said. “That has hurt them for many years.”
In contrast, other luxury retailers such as Neiman Marcus and Restoration Hardware have appealed more to modern tastes and benefited, said Bulwik. Consulting firm Bain & Co. expects the global luxury goods market to grow by 6 to 8 percent this year to $318 billion to $324 billion in sales, thanks to growing demand in China.
Gump’s also faced fierce competition for wedding registry business from Macy’s, Crate & Barrel and WilliamsSonoma. Bulwik doesn’t think Amazon had a major impact on Gump’s business, and noted that Gump’s gets 75 percent of its sales from catalog and online sales.
“Gump’s view is not so much that the products are outdated, because in fact they do sell well to existing customers. The issue is broadening the customer base with new, additional merchandise to appeal to a broader demographic than the company’s traditional core,” said William Noall of Garman Turner Gordon LLP, Gump’s bankruptcy lawyer. “That involves risk and takes capital, which the company simply didn’t have.”
Gump’s has expanded to jewelry at lower price points and a broader gift assortment to appeal to men, Noall said.
But Bulwik said those efforts haven’t been enough.
“I’m not so sure anybody under the age of 50 has set foot in Gump’s at this point, which is unfortunate,” Bulwik said. “The reality is, who buys jade today? Who buys pearl today?”
Most shoppers at Gump’s on Thursday appeared to fit Bulwik’s description. But Sarah Wadhar, 35, was browsing through items on the third floor. The high prices, she said, deter her from putting down money.
“I think it’s definitely super-aspirational. Everything’s very pricey, but it’s also classic,” said Wadhar, a San Francisco resident. “Things here are truly one of a kind. It’s not like an everydayuse item.”
Wadhar hopes the retail space survives.
“I hope it hangs on, at least until January. Where else will I get my Christmas ornaments?” she said.
“It would be very difficult for them to turn it around.” Gary Kaplan, bankruptcy lawyer