Scotty's to buy in-store inventory from Frankel's

Home Channel News, May 3, 1999 by Monica Toriello

WINTER HAVEN, FLA. -- Scotty's, the 150-unit regional chain based here, on April 19 received approval from a U.S. bankruptcy court to purchase the inventory in its stores that was owned by Frankel's Home Furnishings, the struggling Port Washington, N.Y.-based specialty retailer. Frankel's operated leased flooring and domestics departments in 67 Scotty's stores.

Scotty's CEO Tom Morris told NHCN that those leased departments generated about $50 million in sales last year. He declined to give the purchase price of Frankel's merchandise, and the bankruptcy filing was not available at press time. Morris said that Scotty's will most likely retain Frankel's 600-plus employees who work in Scotty's stores (at least half of whom are full-time workers), and possibly some of Frankel's field staff and senior-level executives as well.

"We haven't yet fleshed out all the details," said Morris, but he said that there would be no changes in the operation of departments on the store level. He said Scotty's would "probably stick with Frankel's current vendors."

The Scotty's deal leaves Frankel's with 15 stand-alone stores and nine leased departments in Laneco discount department stores. Frankel's CEO Joe Nusim said on April 20 that the future of the company, which is reorganizing under Chapter 11, was still unclear, and that it was too early to talk about any management changes.

"We have to evaluate how to best handle our remaining divisions," said Nusim. "Our objective is to sell them off, and we are working through the many options available to us. We will make a decision in the very near future."