Amid a slowly recovering economy and a proliferation of online competition, the parent company of iconic Lexington bookstore Joseph-Beth Booksellers filed for bankruptcy protection Thursday.
The chain, which consists of seven Joseph-Beth Booksellers and two Davis-Kidd Booksellers, will close four poorly performing locations. Going forward, President Neil Van Uum said the company will focus on its best stores, including the flagship Lexington location that was the company's first in 1986.
"We're going to focus on those and make them better," he said, adding he expects Lexington, his "big dog" and "lead store," will see no changes except "if anything, a heightened focus."
No employees will be laid off at stores that are being kept open, he said.
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Van Uum said the bankruptcy's roots came in the summer when the company began "to run a little bit sideways" on some of the terms of its loans.
"I recognized we needed to do something," he said.
While the company's bankruptcy protection doesn't specify its exact debt, its top 30 creditors are owed more than $5.8 million. The majority of that — $3.55 million — is owed to book company Ingram.
The bankruptcy will allow the company to continue normal day-to-day operations at its remaining stores until it can close its under-performing locations and emerge from protection in roughly three to four months, Van Uum said.
Closing dates for the four have not been determined, according to a company statement.
Behind the bankruptcy
Van Uum said the bankruptcy traces to a number of factors, including the tattered economy and increasing Internet sales. The chain has seen declining sales for the last five years.
"I think in the next three to five years, you'll see half the bookstores in this country close," he said.
Barnes & Noble, the country's largest bookseller, put itself up for sale in August and has struggled for years with declining sales. It's pinned hopes on initiatives including its Nook electronic reader.
"There's a lot of fixed overhead in the book business, especially with stores as complex as ours," Van Uum said.
He said the company had expanded in hopes of duplicating Lexington's success in other markets, but "we haven't been able to get to that institutionalized stage we have in some of our core markets...
"We spent a lot of time and energy to get stores that weren't performing to perform," he said.
News of the bankruptcy filing disappointed the Lexington business community on Thursday.
"You've got to feel for them," said Bob Quick, president of Commerce Lexington. "They're iconic here...
"When our family comes in from all over the country, the first place they want to go to is Joseph-Beth."
Hap Houlihan, manager of The Morris Book Shop on Southland Drive and a former Joseph-Beth employee, said the company expanded too far outside its geographic core.
"It didn't matter that they were great bookstores," he said. "They just didn't have the oomph to compete with the (Barnes & Nobles) of the world."
Regarding the Lexington store, he said, "it is safe to say it will be their last no matter what happens in the future."
As its largest tenant, that store is also vital to The Mall at Lexington Green, which will be undergoing a renovation in the spring.
Doris Benson, president of Langley Properties and a partner in Lexington Green, said she expects Joseph-Beth to "be back bigger and better than ever with the reorganization."