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AMANDA CEGIELSKI / Staff Photographer
Edward Krell, chief executive officer at Destination Maternity Corp., says that after restructuring at the Philadelphia retailer, “we think we’ve put the things in place to have nice growth long term.”
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Retailers squeezed by new frugality

Consumers have taken a big chunk out of the retail economy, which accounts for two-thirds of U.S. economic activity.

The company now operates stores under the names Pea in the Pod, Motherhood Maternity, and Destination Maternity, and also produces clothing lines for all three.

Former chief operating officer Edward Krell, who in September was promoted to chief executive and in December announced a corporate name change away from Mothers Work Inc., said the plan to "tighten up the belt" and simplify the company had been in the works for a while.

But officials put it into play as the retail market began to deteriorate acutely last summer.

"When there's a tough economy, it makes it easier for you to say, 'Hey, now is the time,' " Krell said. "Necessity is the mother of invention a little bit, and sometimes that's what kind of pushes you over."

"We're not where we want to be in terms of profitability," Krell said. The company recently launched an expansion into India and the Middle East. "But we think we've put the things in place to have nice growth long term."

At Boscov's, the goal in recent months has been repair and reconstruction of the region's only remaining family-owned department store chain.

After having taken on big loans to open nearly a dozen new stores, the nearly century-old retailer declared Chapter 11 bankruptcy in August. A drop in customer sales, partly caused by the economy, had left the debt-soaked company in the danger zone with its lenders.

Drained of cash, Boscov's had stopped paying its suppliers, and store shelves were going empty as vendors suspended merchandise shipments.

In December, the $1 billion company came out of bankruptcy thanks to its 79-year-old former leader. Albert Boscov assembled financing from private investors, state officials, and a number of towns in Pennsylvania and South Jersey that wanted to keep Boscov's alive.

The chain shed 10 stores during bankruptcy. And Boscov and his team have spent the last six months scavenging for merchandise at discounts and passing it along to customers. That has required mending fences with vendors who lost money in the bankruptcy. "We had to convince a lot of people that we were really sorry," Boscov said during a March interview at Deptford Mall. "In the 45, 50 years I ran it, we never hurt anyone."

In recent weeks, consumer confidence has shown signs of rising, and the latest job-loss figures were less steep than they had been earlier, although still high, suggesting an easing of the recession.

But retailers remain cautious and conservative.

"I know that a year from now we'll be looking at a much better economy than we are now," Krell said. "What I'm not sure is how will it look three months from now and six months from now. And we're hopeful. But at the same time, we're managing ourselves very tightly."

 


Contact staff writer Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.

 

 

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