Fortunoff

Fortunoff

Industry	Retail
Fate	Dissolved
Founded	1922 (1922)
Defunct	2009 (2009)
Headquarters	Uniondale, Long Island, New York
Products	Bedding, furniture, jewelry, and housewares
Owner	Formerly NRDC Equity Partners, via Hudson's Bay Trading Company
Website	www.fortunoff.com

Fortunoff was a New York-based retailer of home, jewelry and furniture stores founded in 1922 by Max and Clara Fortunoff. The original Fortunoff store was on Livonia Avenue in Brownsville, Brooklyn, New York. The chain's flagship store was in Westbury, Long Island; the store opened in 1964 and anchored The Mall at the Source, which was built around the Fortunoff store, from 1997 until Fortunoff's closing in 2009.^[1]

Fortunoff had four full-line stores in the chain. In addition to the Westbury flagship, these stores were located in White Plains, New York; Woodbridge, New Jersey; and Wayne, New Jersey. In addition, Fortunoff operated 16 specialty stores:^[2] Jewelry and fine gifts were offered at the chain's shops on 57th Street in Manhattan, which closed in February 2009, and were also offered at Fortunoff's Paramus Park Mall location. A clearance center was also operated in East Garden City, New York. Indoor and outdoor furniture were the focus of another 14 stores throughout New York, New Jersey, Connecticut and Pennsylvania; these stores were known as "Fortunoff Backyard Stores". This portion of the Fortunoff chain was revived in February 2010, although not all former Fortunoff Backyard Stores have reopened.

The chain began liquidating all of its stores on February 25, 2009;^[3] the sales concluded a little more than three months later in the first week of June 2009. In July 2009, following company dissolution, the descendants of Max and Clara Fortunoff reacquired the intellectual property and website.^[4][5]

Fortunoff now does business as an online jewelry retailer, as well as operating its Backyard Stores.

Ownership

The Fortunoff and Mayrock families, descendants of the founders, owned 100% of the company until November 2004, when a 75% interest in the company was acquired by Trimaran Capital Partners and the Kier Group.^[6][7] However, several members of the founding family remained involved in the management and operation of the company. The sale, which originally was to have closed in December 2004, eventually closed in July 2005.

The following years saw Fortunoff continue to struggle, and on February 4, 2008, the chain filed for Chapter 11 bankruptcy along with accepting the $100 million sale to NRDC Equity Partners,^[8][9] the parent company of longtime New York retailer, Lord & Taylor. The sale was estimated to include Fortunoff's debt of approximately $60 million.^[10] Industry analysts speculated that a likely result of the buyout by NRDC would bring Fortunoff-branded jewelry and home furnishings departments into most if not all of the 47 current Lord & Taylor locations. This list includes the department store's flagship Fifth Avenue location, where such holdings could exceed 100,000 square feet (9,300 m²) in sales floor area—approximately one sixth of the total area of the store. The NRDC deal closed in March 2008. NRDC also released statements about intentions of infusing an additional $100 million in capital to Fortunoff and expanding the chain to over 50 stores. NRDC never followed through investing the planned capital needed to rescue the brand.

In July 2008, NRDC Equity Partners, purchased Canada's 338-year-old retailer, the Hudson's Bay Company.^[11] The new combined company called Hudson's Bay Trading Company was composed of Fortunoff, Lord & Taylor, Creative Design Studios, and the HBC's divisions: the Bay, Zellers, Home Outfitters, and Fields.^[12]

On February 5, 2009, Fortunoff filed for Chapter 11 bankruptcy, citing a weak 2008 holiday season, ballooning costs in its partnership with Lord & Taylor and reduced borrowing capacity due to the recession. Officials at Fortunoff originally hoped to sell the luxury-goods chain. Finding no takers, layoffs began on February 12, 2009, at the Fortunoff headquarters in Uniondale, New York. A class-action lawsuit against Fortunoff was filed by laid-off employees who alleged violations for federal and state WARN Act laws. It was further alleged that many of Fortunoff's vendors were lured into shipping increased consignments of merchandise and goods for the Fortunoff/Lord and Taylor venture prior to the abrupt bankruptcy filing one year and a day after NRDC's purchase of the company. The timing of the filing allowed NRDC's Fortunoff "shell" companies, created during the initial purchase, a "secured creditor" position above other creditors.

On February 17, 2009, Fortunoff stopped accepting its gift cards as payment, angering customers. A bankruptcy auction was scheduled for February 23, 2009.

Liquidation

On February 25, Reuters announced that the bankruptcy auction for Fortunoff resulted in the chain being sold to a group of seven liquidators and that going out of business sales would begin immediately. Fortunoff stopped accepting returns at that time and declared that any purchase made after February 16 was considered to be final.

SimplexDiam Inc. of New York City was entrusted with auctioning the residual diamonds from the fine jewelry division.

When the company was in process of being liquidated, plans to brand Lord & Taylor's fine jewelry and home-furnishing departments under the Fortunoff brand were canceled.

During the Spring of 2009, CONSOR Intellectual Asset Management^[13] was retained to sell the Fortunoff brand, intellectual property and related intangible assets. As a result of that effort, in July 2009, the Fortunoff brand and intellectual property were reacquired by David Fortunoff and members of the Fortunoff and Mayrock families with the possibility of relaunching the brand.^[14]

2010 relaunch

In September 2009, the company reached an agreement with Furniture Concepts, LLC allowing Furniture Concepts to sell Fortunoff-branded outdoor furniture. As part of this, the new owners of Fortunoff are reopening the chain's former Backyard Store unit, with six locations to open in February 2010.^[15] Fortunoff said that most of the stores will be located at or near former locations, including in The Mall at the Source.^[16] As of 2016, Furniture Concepts operates 28 Fortunoff Backyard Stores in New York, New Jersey, Connecticut, Delaware, Pennsylvania and Florida.

References