Today's bankruptcy filing by Ritz Camera Centers shows just how tough it is out there for companies facing both a wary consumer and long-time challenges from shifting technology. The lucrative photo finishing business has been declining for some time, but the holiday season appears to have gotten even worse as camera customers cut back and sales at Ritz's chain of boating stores declined.
The Beltsville, Md.-based company is the largest camera chain in the country, with more than 1,000 stores in 45 states, including Wolf Camera, Kits Cameras, Inkley's and The Camera Shops in addition to stores bearing the Ritz name, plus a 137-store chain of boating supply stores, Boater's World Marine Centers. For now, the company is still operating and continues its attempt to revamp as it tries to secure $85 million of financing to keep restructuring.
Reuters quotes Chief Restructuring Officer Marc Weinsweig (if your company has an executive with that title, be wary) from an affidavit regarding the filing, who says the company's lenders forced Ritz to up its reserves in January, which cut its credit during what was a very poor holiday shopping season:
He said this came after the recession caused Ritz's 2008 holiday sales to be "materially lower" than a year earlier. Ritz was also hurt by losses at Boater's World, which suffered falling sales in 2008 as gas prices soared.
"The loss of revenues and profit margins from the diminution in the photo-finishing business proved too much of a burden," he wrote. Ritz said.
The filing also shows the Ritz's largest unsecured creditors are Nikon Inc. with a $26.2 million claim and Canon USA with a $13.7 million claim, according to Reuters. Shares of both camera makers have been slumping badly for months.
No word yet on what that restructuring will mean for job cuts or store closings. Feel free to weigh in in the comments.