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"It's a sad day for Harold's," said an employee of Norman's Campus Corner store who asked not to be named.
One day after the venerable Harold's chain filed for Chapter 11 bankruptcy protection, the stores were open Saturday as usual. Several of its related companies filed for bankruptcy as well.
According to an affidavit of Harold's chief executive officer, Ronald S. Staffieri, in support of first day motions, filed in Dallas County by Judy Hamilton Morse of Crowe -- Dunlevy on behalf of Harold's Stores Inc., it showed that during the 26 weeks ending Aug. 2, Harold's incurred a net loss of $7,714,000 and "realized net cash used in operating activities" of $4,560,000. As of that date, the firm's liabilities exceded its assets by $19,753,000, the affidavit said.
Despite a "long-term strategic plan to return the company to profitability," implemented in 2007, Harold's sales were down 23.6 percent over the same time the previous year, the affidavit stated. Most recently, the company cut 65 corporate or administrative positions, reducing its staff from 624 to 559.
"Harold's believes that its sales results were impacted by, among other things, the very difficult current macroeconomic and consumer environment creating declines across the retail industry and the fact that apparel trends are not as robust as in the past," the affidavit stated.
Exacerbating the operating losses were "the unprecedented events in the financial and consumer markets since late Sapetember," the affidavit states.
In February and March of this year, Harold's took out loans of $1.8 million and $800,000, respectively, guaranteed by Ronus Inc., the affidavit states. Ronus is owned by Ronald deWaal, who became the primary shareholder of Harold's Stores Inc. in 2001, the year Harold's moved its corporate headquarters to Dallas, and a new Subordinated Loan Agreement between Harold's and Romus, dated June 19, was to provide for advances up to $5 million.
"Because it has been unable to restore profitability, Harold's continued to be dependent on Ronus for additional financing," the affidavit says. "However, de Waal and Ronus have advised Harold's that they are no longer willing to continue funding the operating losses of [the company] and they are under no obligation to do so."
Harold's, founded by Harold Powell of Norman in 1948, opened its first store on Campus Corner. A Harold's Outlet store on University Boulevard closed earlier this year.
The company moved its headquarters from Norman to Dallas and currently operates 41 upscale ladies' and men's specialty stores and two outlets in 19 states and an online store.
The company estimated assets and liabilities between $10 million and $50 million in the filings.
Although stores continue to be open, a message on the company's Web site says it has stopped accepting orders.
Harold's has stores in 19 states, mostly in the South, West and Midwest.
Stores in Oklahoma also include 50 Penn Place and Rockwell Plaza in Oklahoma City and The Farm Shopping Center and Utica Square in Tulsa.
In addition to Harold's Stores Inc., Harold's Direct Inc., Harold's Financial Corp., HSTX Inc., Harold's of Jackson Inc., Harold's Limited Partner Inc. and Harold's Stores of Texas LP also filed bankruptcy.
The Associated Press contributed to this report.
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