Crown Books officially emerged from bankruptcy last week, approximately 16 months after filing for Chapter 11 protection to cope with declining sales and escalating losses. The new Crown currently has 92 stores located in five metropolitan areas--Washington, D.C., Chicago, San Francisco, Los Angeles and Chicago--and is projecting sales of $190 million for the current year. Prior to its bankruptcy filing, Crown had 179 outlets and at one point had sales as high as $305 million. Steve Panagos, Crown's interim CEO, told PW that the chain will remain focused on being "a discount bookseller." He claimed that when shipping costs are taken into account, Crown's books are cheaper than those that can be bought through online retailers.
Panagos said Crown's immediate goal is to have a successful holiday season; during the spring the chain will unveil its e-commerce strategy and over next summer the company will address the issue of opening new stores and remodeling old outlets. Crown's traditional stores offer 30,000 titles and its superstores carry 80,000 titles, something Panagos d s not expect to change in the near term. How aggressively Crown moves into new areas will be decided by the company's new CEO, although Panagos speculated that Crown would have about the same number of stores open next November as it d s now. He said the company is looking for a CEO "with a growth-oriented background," and that he hopes to have some one in place "as soon as possible."
Despite the distractions of being in bankruptcy, Crown's comparable store sales through October were running 14% ahead of last year's pace. The company has a $35-million line of credit, which will be enough to meet Crown's working capital needs for the next 24 months. Some of the financing will go toward establishing a new headquarters facility somewhere near Crown's current location in Landover, Md.; Panagos expects to be in a new building by next summer.
Under terms of the reorganization plan, which was confirmed in early October (News, Oct. 11), all of Crown's old stock has been canceled and the new stock given to Crown's unsecured creditors. Shenkman Capital Management is now the chain's largest single shareholder, with about a 33% stake in the company.
Panagos said he was "extremely happy that we can put the craziness behind us and focus on Crown's future."
