Contact Center Industry News

TMCNet:  Surplus chain reopens doors: Sunny's is back from Chapter 11, this time with three stores, not 15

[November 09, 2007]

Surplus chain reopens doors: Sunny's is back from Chapter 11, this time with three stores, not 15

(Baltimore Sun, The (KRT) Via Thomson Dialog NewsEdge) Nov. 9--Outdoors and military surplus store Sunny's Surplus is back in business less than a year after declaring bankruptcy for the second time in a decade -- though on a much smaller scale.

The retailer has opened three stores in Annapolis, Westminster and Frederick. It had 15 stores in January when it sought Chapter 11 bankruptcy protection. It closed all of the stores at the time.

Michael Weinman, who was the majority stockholder of Sunny's parent company and a member of the founding family, created an entity called New Sunny's to buy the company's remaining assets after most of them were sold in going-out-of-business sales earlier this year.

Weinman paid $25,000 in September for what was left, which included equipment, trademarks, licenses and the Sunny's name, according to bankruptcy court records. The federal bankruptcy court in Baltimore approved the sale of the assets, according to the court records.

The company owed $1.1 million to its largest unsecured creditors when it filed for Chapter 11 protection.

The company thought vendors would be more likely to recoup losses from future sales from the new stores than they would if they remained closed, Sunny's said in a bankruptcy court filing.

The bankruptcy was the second time Sunny's had filed for reorganization in the last decade. It also filed for Chapter 11 in 2000 and emerged 13 months later.

Sunny's first opened in 1948 to take advantage of the surplus in military apparel and outdoor gear left over from World War II. The stores sell items such as military uniforms, camouflage clothing, combat boots, dog tags, equipment and tents. Stores also carry name-brand outdoor clothes, work-wear and camping supplies.

Many wonder if the company will be able to survive. It faces more competition from larger chains such as Sports Authority and Dick's Sporting Goods and discounters such as Wal-Mart Stores Inc. and Target.

"I would say the odds are against them," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail investment banking firm and consultant in New York.

Sunny's has brought back Benjamin Gilbert, a former chief executive and president, to operate the three new stores.

Gilbert said there is still a niche for Sunny's to serve.

"Our products were never a problem," he said. "The overhead was the problem."

Gilbert said the company has reduced overhead costs by shutting down its manufacturing facility and having merchandise delivered directly to stores. It will also open smaller stores, with none being larger than 5,500 square feet.

He said Sunny's stores carry a larger selection of outdoors and military surplus than its competitors.

"They sell some," Gilbert said of Sunny's competitors. "But ours is one-stop shopping for all camping needs, all outdoors needs and all military surplus needs. We don't have any real direct competition."

Gilbert said the success of the three stores would determine how many more are built.

The retailer could open four or five stores in Maryland, Sunny's said in a filing with the bankruptcy court.

Brian Gibbons, president and CEO of Greenberg Gibbons Commercial, said he still believes there is a customer base for Sunny's. His company leased space to Sunny's for a store at its Westminster Crossing shopping development in Carroll County.

"The Sunny's Surplus name is an extremely well-known brand in the greater Baltimore region and, throughout its long history, has established a unique niche and a loyal customer following," Gibbons said in a statement.

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Copyright (c) 2007, The Baltimore Sun
Distributed by McClatchy-Tribune Information Services.
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