FRESNO — Officials with department-store chain Gottschalks Inc. say a company based in the British Virgin Islands has severed plans to invest $30 million to help them develop a wholesale business and implement direct sourcing and consignment product sales.
Paperwork filed Thursday with the Securities and Exchange Commission shows Everbright backed out of the deal with the Fresno-based chain of 59 department stores.
Tulare Business Journal (no link):
Gottschalks (Pink Sheets: GOTT) tumbled deeper into penny-stock territory Friday morning after a Chinese company backed out of an agreement that would have given the troubled retailer a cash infusion of up to $30 million.Gottschalks traded as low as 14 cents per share Friday morning, down 69 percent from Thursday’s close of 45 cents. That broke below its previous all-time low of 22 cents per share set Nov. 21.
The latest selloff gave the company, which has annual sales of almost $600 million, a market valuation of less than $2 million.Gottschalks, which operates 59 department stores and three specialty stores in California and five other Western states, has lost $32 million in the past seven quarters, including almost $20 million in the first three quarters of this year, as a result of the tough economy and questionable strategic moves.
Industry analysts are now pondering the immediate future of the retailer. If suppliers who were bolstered by the deal's prospects cut Gottschalks off, it could be forced to begin a liquidation with closure sometime next year, said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York.
"Gottschalks needs divine intervention," Davidowitz said. "They are in a very tough place."
Sr Employee sells some shares earlier this month.