Jamesway emerges from Ch. 11 - Chapter 11 bankruptcy proceedings

Discount Store News, Feb 20, 1995 by Dawn Wilensky

SECAUCUS, N.J. - Following bankruptcy court approval of its reorganization plan late last month, Jamesway said it will tinker with its prototype in 20 to 25 remodels slated for this year.

The changes, according to president and ceo Herb Douglas, include the elimination of the four "power corners" devoted to domestics, home entertainment, toys and RTA furniture in favor of five "power walls," which he said "would give the chain 25% mote capacity."

These walls will feature an impactful presentation of toys, sight and sound, lamps, a solid color towel program from a major supplier and a "shop within a shop" of Rubbermaid products. The walls will debut in five remodels in New Jersey at the end of March.

These changes come following the Jan. 30 approval of Jamesway's reorganization plan by the U.S. Bankruptcy Court in Manhattan.

According to the plan, new stock and warrants will be traded on a when-issued basis. In addition, its post-confirmation credit facility for $115 million has been completed with the CIT Group.

In accordance with the reorganization plan, 12 million shares of new Jamesway common stock are being issued on a when-issued basis until the shares have been distributed by the transfer agent.

In addition, 720,000 warrants to purchase the new stock are being issued to the old shareholders. The warrants are also available on a when-issued basis until they have been issued in exchange for the 13.9 million shares of old Jamesway common stock.

The company reported that disbursements to secured creditors will be made as soon as practical. Unsecured creditors will begin to receive on account payments of cash and stock by the end of the month. Subsequent payments will be made at regular intervals until claims have been satisfied.

Douglas told DSN he is committed to the framework established during the chain's reorganization, which started when it filed for Chapter 11 in July 1993.

"We are following the same path that we were on before," Douglas said. "We will continue to have the same three objectives - increase inventory turns and sales per square foot and create clean and simple stores."

These initiatives are the latest in a series of steps the company has taken to firm up its position in the competitive discount retailing arena.

The most significant was the appointment of Douglas to head up the chain in September 1994. He spent eight years at Bradlees, most recently as its senior vice president of merchandising.

The chain continues to focus on women, with children and seniors as its core customers, and has taken steps to cater to the needs of these groups. To this end, an expanded family clothing department now carries an assortment with more emphasis on color, style and brand name fashions.

The initiation of a targeted, aggressive advertising campaign and a customer service program will act to support the new strategies. These changes are really the second stage of a merchandise revamp started prior to Douglas' appointment.

Early last year, the chain implemented a new merchandising mix focusing on higher margin apparel and home furnishings. As part of this program, the chain established a Core/Fringe strategy that divided its product mix into three categories. Fringe categories were classified as those to downsize, and in some cases eliminate. Secondary core categories were to be maintained at current levels and primary core categories were emphasized.

At that time, the chain created a special purchase program to differentiate itself from larger competitors. This program, which typically features merchandise obtained through overruns, closeouts and odd lots, has been expanded to include almost every category in the store.

However, Douglas is quick to point out that the chain is going to keep inventory levels down and as a result will increase turns by 20%. To this end, the chain will streamline its product mix and pay careful attention not to overbuy or duplicate products, especially in its special purchase program.

Besides sprucing up its stores, Jamesway has also instituted a new management structure which separated merchandising, marketing, stores and operations. Merchandising and marketing will remain under the control of Tom Kiley, executive vp, and stores and operations will be run by an executive vice president whose identity is yet to be announced.

Douglas also indicated that Jamesway will hire a general merchandise manager for soft lines, divisional merchandise managers for both housewares and textiles and a regional vice president within the next four weeks.