Within a week of handing the reins to a third-generation family leader, Boscov's announced ambitious expansion plans, fueled by the demise of other famous department stores that had left behind empty anchor sites across the region.
Though times were good and the economy relatively strong then, the money spent on buying and occupying the 10 new stores may have helped drain the chain of the financial cushion (and cash) it now needs to convince suppliers it can pay its bills.
Chief executive officer Ken Lakin, 54, who assumed control, has been searching for a private-equity deal to generate the cash needed to avoid bankruptcy. He said no one imagined things unfolding the way they have as the economy has gone south over the last 12 months.
"I don't think anybody could have envisioned the downturn in the lending community, the contraction of the trade, and the pressure that's been applied to the consumer by higher prices and less lending, less credit availability," Lakin said. "It's a perfect storm."
Lakin has declined to discuss the rampant rumors over the last week that Boscov's may be flirting with bankruptcy.
Looking back to when he took over as chairman in early 2006, Lakin said the company had taken steps to replenish the cash it lost in buying out his father, then 82, and uncle, then 76.
"The two principals in the company had been looking for a way to capitalize their 50 years of blood, sweat and tears that they put into building the business from nothing to a 40-store chain," Lakin said.
With help from an investment bank in Reading, the company entered into a private recapitalization agreement around the time of the Lakin-Boscov retirements and replaced, dollar for dollar, the money given to both men as part of their buyout package, Lakin said.
The opportunity to buy 10 properties from Federated Department Stores Inc. in Pennsylvania, Maryland and New Jersey - including five old Strawbridge's locations - was "a surprise."
