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Jacobson's in Franklin Park Mall is to shut because it is one of the chain's poorest performers.
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Jacobson's will close Franklin Park store, seek bankruptcy

THE BLADE

Jacobson's will close Franklin Park store, seek bankruptcy

Specialty retailer Jacobson Stores, Inc., yesterday said it filed for Chapter 11 bankruptcy protection and will close five stores, including its only Toledo store, at Franklin Park Mall.

The store, one of the mall's four anchors since 1974, is to be shuttered in about 90 to 120 days because it is one of the Michigan-based chain's poorest performers. The local shop employs 160 people.

The news was the second major development for Toledo's largest mall in two days. The Blade revealed yesterday that the 1.1 million-square-foot mall has been sold and is to have an Australian owner in about three months if a larger transaction is completed.

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The Jacobson closing was not unexpected, a Franklin Park official said, and its space should not be empty long because many retailers have expressed interest in recent years in moving into the mall at Monroe Street and Talmadge Road.

Still, the news proved shocking to some.

‘‘Ohhhh, noooo,'' said Marilyn Knake of Perrysburg, who went to the store yesterday to shop with a friend, Carol Wilson of Bowling Green.

‘‘This was my favorite store,'' Ms. Knake said.

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Ms. Wilson, who has a relative who works at Jacobson's, said she knew the store was in trouble but had no inkling bankruptcy was in its future.

‘‘It's so sad,” she said. “I come from Bowling Green just to shop here.''

Jacobson, headquartered in Jackson, Mich., operates 23 stores in Ohio, Michigan, Indiana, Kentucky, Kansas, and Florida. The other stores it is closing are in Columbus and in Clearwater, Osprey, and Tampa, Fla. In all, about 520 jobs are affected. The closing will eliminate the retailer's Ohio presence and leave eight stores in Florida.

“This action will allow Jacobson's to maintain normal business operations in our 18 best performing stores while restructuring our finances,” the company said in a statement.

The company said it reached an agreement for $130 million in restructuring financing from Boston's Fleet Retail Finance, Inc., and Back Bay Capital Funding LLC. After the company's announcement, trading on its stock on the Nasdaq was halted, with a price of 46 cents a share.

In December, Jacobson reported a third-quarter loss of $13.9 million, or $2.40 per share. In a filing with the U.S. Securities and Exchange Commission, the company said it would default on a $150 million line of credit unless it negotiated new deals with its lenders. The company had failed to uphold several loan covenants and announced that it will not make interest and other payments due on some of its debts.

The chain eliminated 225 positions in October, including nearly 20 percent of the headquarters jobs, reducing its work force to 4,100.

Jacobson filed for Chapter 11, which holds creditors at bay as the company assembles a reorganization plan, in U.S. Bankruptcy Court in Detroit. The bankruptcy judge must approve the closing and disposition of the five stores, so it is unclear how quickly that will happen.

The damage to Franklin Park is expected to be minimal because Jacobson owns its building and the land beneath it, which is unusual in the mall industry. The chain can, with the court's permission, sell it. Scott Vallee, the mall manager, said the mall had been approached at least twice last year and more in the past by retailers seeking to become an anchor. That list could be forwarded to the court, he said, declining to identify who is on it.

A spokeswoman for Westfield America Trust of Australia, which is expected to take over the mall in about 90 days, said her company is unsure what direction it will take at Franklin Park. The mall is owned equally by Rouse Co. and Rodamco North America NV.

Although Jacobson's at Franklin Park has had a dwindling customer base, Mr. Vallee said the mall is highly coveted and a new tenant might be operating by Christmas in the two-story, 110,000-square-foot store space.

Jacobson spokesman Fred Marx said the chain has received calls from other retailers eager for permission to talk to the employees affected by the closings.

Mark London, a Chicago mall consultant, said there's every reason to think that a retailer like Kaufmann, which has agreed to be an anchor at the Mall at Fallen Timbers project in Maumee, might want to bolt.

“You'd certainly have to consider them as a possibility,'' he said. ‘‘If the owners of Franklin Park could do something that helps Franklin Park and takes some of the wind out of the sails of the General Growth project, then that's a double whammy.''

A discount store such as Target is unlikely, he added.

But mall industry consultant Stan Eichelbaum, of Cincinnati, who expects mall owners to bid on buying the store, said the replacement could be a discounter or a sporting goods retailer like Galyan's Trading Post or another department store like Sears or someone similar to Jacobson's.

Mr. Vallee said the mall has an agreement that stipulates that a replacement retailer can't be radically different from Jacobson's, such as a home improvement store or a furniture dealer.

As to what has made the Toledo store underperform, Mr. Vallee said the upper-scale department store has a “different niche,” but its clientele is aging and the chain did not cultivate many younger customers, and that may have led to its troubles.

‘‘You keep getting older customers over the years, and then you find many have moved to retirement communities in Florida or Arizona, or worse, they just don't shop there anymore,'' he said.

Many of the local Jacobson's employees have worked there since the chain purchased the building from the former Lamson's department store chain before it went bankrupt.

One former Jacobson's clerk, who left her local job just after Christmas, said yesterday that it was apparent something was amiss because lines of perfume and aftershave the store traditionally carried were not available and there was no indication the inventory would become available.

‘‘I'm not surprised at all,'' agreed Beth Koncval, manager of Deck the Walls, a print and framing store just a few doors away in Franklin Park. ‘‘You could tell from the traffic this Christmas that it wasn't going well.”

Said shopper Sharon Burgin of Maumee: ‘‘I heard something that they were doing poorly, but I didn't think they'd be closing. When you wanted something special, this is where you would go.''

Mr. Vallee, the mall manager, said it was known generally that Jacobson's was struggling, but he called it “a shock” that the chain filed bankruptcy. The mall has had two or three tenants file bankruptcy, he added.

First Published January 16, 2002, 12:56 p.m.

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