Francesca’s, In-Shape Health Clubs, Guitar Center struggle with bankruptcy as Game Stop continues downsizing its footprint nationwide
VISALIA – The COVID-19 shutdown is affecting many Visalia businesses, including well-known chains, large and small. News of recent retail bankruptcies and closures have more outlets teetering on the edge. Here is a list of recently announced business closures and/or bankruptcies.
The operator of 10 health clubs in Central California, In-Shape Health Clubs filed for bankruptcy reorganization last month after shrinking revenue forced it to permanently close 20 locations during the pandemic. In a Dec. 16 statement, the Stockton-based company said “As you know, California’s mandated shutdown of gyms has kept us closed for the better part of 2020,” noting that the statewide shutdowns have “dramatically impaired [In-Shape] revenue.” So, the company decided to “take steps to restructure so we can focus our resources to ensure our long-term viability.”
In-shape will return to court on Jan. 11 with a meeting of creditors scheduled for Jan. 22. In-Shape said the filing will not impact memberships or rates and that all memberships have been transferred to the nearest location offering outdoor workouts. The popular gym has two locations in Visalia, one in Porterville as well as six in Bakersfield. In-Shape Health Clubs operates more than 64 full-service health clubs throughout California. In Visalia, the Mooney Boulevard location is closed and the gym on Demaree Street is open for outdoor use by reservation.
“In-Shape and our extraordinary team members are not going anywhere,” the company said on its web site. “We’ll continue to support our communities in their fitness journeys as we work through this restructuring process.”
Houston-based Francesca’s Holdings Corp. (Nasdaq: FRAN) women’s clothing and accessories boutique has a location at the Visalia Mall. The retailer has filed for bankruptcy protection and is closing a large number of stores. No news if the Visalia location will be affected. The company has a store in San Luis Obispo and Bakersfield as well.
Guitar Center filed for bankruptcy in November but now looks to exit Chapter 11 approved by a court this past week. The chain is the largest retailer of music instruments. The store was hit by the pandemic’s effect on customers and their budget for discretionary purchases.
The company says they hope less debt will allow them to move forward. The Visalia and Fresno stores remain open.
With three stores in Visalia, locations in Hanford and Tulare and several in the Fresno-Clovis area, Game Stop is one of the largest chains of video games and software in the U.S. with over 5,100 locations. The Texas company announced in a Dec. 8 presentation to investors that it will close more than 1,000 stores by the end of its fiscal year in March 2021. Game Stop cut down more than 783 stores over the previous two years, including 74 in the last quarter alone, which ended on Oct. 31. The company attributed the losses to a combination of no new consoles, due to the delayed launch of the PS5 console and games and accessories for it as well as the pandemic forcing most of its stores to close during lockdowns, including every store in California for several months. The PS5 did not hit stores until November, leaving the company hopeful for the fourth quarter, which ends on Feb. 28, and confident heading into its 2021 fiscal year.
“We begin the fourth quarter with unprecedented demand in new video game consoles that launched in November, which drove a 16.5% increase in comparable store sales for the month, despite being closed on Thanksgiving Day and the impact of COVID-19 related store closures, which affected most of our European footprint,” CEO George Sherman said in the Dec. 8 earnings call. “We anticipate, for the first time in many quarters, that the fourth quarter will include positive year-on-year sales growth and profitability, reflecting the introduction of new gaming consoles, our elevated omni-channel capabilities and continued benefits from our cost and efficiency initiatives, even with the potential further negative impacts on our operations due to the global COVID-19 pandemic.”
The presentation came after Game Stop reported net sales of $1 billion in third quarter down 30% from the same time last year. However, the $19 million loss was a huge improvement over third quarter net losses of $83 million in 2019 and $489 million in 2018. Game Stop also reported a 257% increase in online sales, launched a same-day delivery option at more than 2,000 stores, and thanks to cuts over the last two years has doubled its cash on-hand and can cover 63% of its outstanding notes.
“As we continue to optimize our business model, we are shifting focus to execute the transformational components of our strategy that will position GameStop to be a leading omni-channel retailer for all things games and entertainment, which we believe will lead to sustained long-term profitable growth,” CFO Jim Bell said in a released statement. “Over the past 18 months, we have remained steadfast in focusing on creating a more efficient business model. These efforts, despite the impacts of a global pandemic, have led to a stronger balance sheet.”