The company plans to close 69 of its 355 stores, including the stores in Gainesville and Cumming. It is not known how many employees are affected.
The store in Gainesville opened in its current location at 826 Dawsonville Highway about a decade ago. The company’s first store in Gainesville was located at 250 John W. Morrow Jr. Parkway.
"While Goody’s has a very successful 55-year heritage and we serve an important market niche, we have recently faced considerable challenges," said Paul White, Goody’s recently appointed chief executive officer. "After careful analysis, we made the decision to restructure the business through a Chapter 11 filing in order to streamline operations, refocus on our core business and strengthen our balance sheet so that Goody’s is better positioned for the future."
The store chain dates back to 1953 when M.D. Goodfriend of Athens, Tenn., and a partner began what would eventually become a group of 12 outlet stores.
In 1978, the company changed its name from Outlet Stores to Goody’s Family Clothing. Bob Goodfriend, M.D.’s son, was nicknamed "Goody" in college. Bob Goodfriend became president of the company in 1979 and shifted the focus to first quality brand-name apparel.
In 1991, the company became publicly traded and opened its 100th store. Five years later it had grown to 200 stores. In 2006, the company was acquired by GMM Capital and Prentice Capital and became a private company.
White was hired in March from Wisconsin-based ShopKo. He succeeded Chuck Turlinksi, a former CEO of The Limited, who lasted about a year with Goody’s.
"My sense is that they probably got squeezed a little bit by the Targets and the Wal-Marts and the Kohl’s," said Cole Piper, an executive in residence at the University of Tennessee Business School.
"Goody’s, for a long time, had a very good strategy. They went into the second- and third-tier markets, and they pretty much had the markets to themselves. Then with the expansions of Wal-Mart (and others), there was just more competition," Piper said.
Competition mixed with a slowdown in the economy, the departure of Goodfriend — the public face of the company — and several attempts to redefine its merchandising strategy. Those combined for a "perfect storm," Piper said.
"I think they can (rebound), but I think they are going to have to cut back some, consolidate and get back to whatever base they determine is their most profitable base," said Piper, a longtime executive with the former Proffitt’s department store chain.
The company said it is seeking approval to pay its employees, continue various benefits and honor customer programs.
Goody’s also said it has secured a commitment for $210 million in debtor-in-possesion financing to add to its working capital and provide enough liquidity while it reorganizes.
The financing includes $175 million under a revolving credit facility from General Electric Capital Corp., $15 million under a term loan from GB Merchant Partners LLC and $20 million under a junior term loan facility from PGDYS Lending LLC. Prentice Capital Management is the managing member of PGDYS LLC.
The Associated Press contributed to this report.