Bankrupt chain gives up fight for survival

Lauriat's Inc., the New England-based bookstore chain founded in 1872, is going out of business. According to Lauriat's chief financial officer, Todd Miller, the company expects bids from auction houses today, June 14, and, pending court approval, the company should begin liquidating its stock by the end of the week. Under the plan, all 71 Lauriat's outlets will conduct going out-of-business sales, and unless a third party decides to acquire the Lauriat's name and/or some leases, the bookstore chain will close once the sales are completed.

The decision to liquidate the chain came about 15 months after Lauriat's filed for Chapter 11 bankruptcy protection and hired turnaround specialist Matthew Harrison to head the company (News, Mar. 9, 1998); Harrison resigned from the company last week. Under Harrison's direction, the number of outlets was slashed from 161 to 71 as he tried to position the company as a neighborhood bookstore.

Despite the cooperation of publishers and early signs of progress, the company was hindered by its lack of capital. "Lauriat's always has been and continues to be undercapitalized," Miller told PW. Although the company had reached an agreement in early May for a $25-million credit line from Paragon Capital (News, May 10), Miller said that low inventory and publishers' concerns about the viability of the chain made it impossible for Lauriat's to achieve the sales level it needed to move forward.

Lauriat's had employed approximately 800 people, most of whom are expected to be gone by the end of this week. Miller said he hoped other retailers and publishers in the area would hire "these very talented people."

Lauriat's attempted to make the jump from a New England chain to a broader bookseller covering much of the Northeast when it bought Encore Books in late 1994. The purchase more than doubled the size of Lauriat's, but the company never had the funding to fully integrate the operations or to mount a successful marketing campaign to compete with the superstores.

The demise of Lauriat's follows word in May that Waterstones is closing its three Boston stores. A New England independent bookseller said he is concerned that the departure of both chains may cause publishers to have second thoughts about the number of reps they will assign to the region in the future.