Shareholders invested in Gottschalks' future

Jan 18, 2009 (The Fresno Bee - McClatchy-Tribune Information Services via COMTEX) -- GOTT | Quote | Chart | News | PowerRating -- Some longtime Gottschalks shoppers are more than just good customers. They are stockholders of the company, too.

Many bought shares of stock in the Fresno-based retailer when it went public in April 1986. Some only bought one, just to be part of the company.

Now, the department store chain, whose history dates back more than 100 years has filed for bankruptcy protection, leaving some of its most ardent supporters and stockholders struggling for answers.

"Something has to be done," said Sarah Key of Fresno, one of 661 stockholders. "We can't let this company die."

Key is typical of many Gottschalks supporters who own small amounts of stock, generally fewer than 100 shares, and still have faith in the company despite its plummeting fortunes.

The chain operates 58 department stores and three specialty clothing stores in the western United States. It also has its corporate headquarters in north Fresno and a large distribution center in Madera.

In its heyday, the company's stock climbed to more than $25 a share in 1991.

But Gottschalks, like other regional department-store chains in more recent years, has been caught in a dangerous middle ground between big-box discounters such as Wal-Mart and national retailers like Macy's.

The severe national recession, which has hurt nearly all retailers, slashed the company's revenues and plunged its earnings into the red. Gottschalks last reported a quarterly profit in the final three months of fiscal 2007.

It December, same-store sales fell 9.6% from the same period a year ago.

Delisted from the New York Stock Exchange in October 2008 after its market value dropped below $25 million. Gottschalks stock closed on Friday at 11 cents a share.

Wednesday's bankruptcy filing came as no surprise. With the help of short-term financing, the company will operate normally as it works to reorganize and pay off debt. Gottschalks must find a buyer -- a very difficult feat in this economic climate experts say -- by a March 24 creditors' deadline or liquidate.

Still, Key isn't ready to sell. She looks at her Gottschalks stock as something more than an investment.

"This is a company that has supported the community, that has been a part of Fresno," Key said. "I know things are not good, but I am still sticking with them."

Others also are hopeful.

Nick and Jessie Notarnicola of Exeter said their Gottschalks holdings, now worth about $22, has lost about $2,000 of its value.

Nick Notarnicola is hanging onto it for now, with hopes the company can emerge out of bankruptcy and continue to operate.

"It is not a lot of money at this point," Notarnicola said. "And you just never know. They may sell off some stores, tighten their belts and come out of this better off."

Like Key, Notarnicola put money in Gottschalks because it's a local company. He and his wife shop at the store in Visalia.

"It is a good local business, and it would be a shame if they are no longer here," he said.

Not everyone believes the struggling retailer can make it through its latest crisis.

Billie Vidmar of Fresno cashed in her stock in 2005 after becoming frustrated with the financial performance of the company and the leadership of CEO Jim Famalette.

"I no longer had faith in Famalette and his crew," Vidmar said. "I just didn't like what was happening to the stores. To me, they downgraded the quality of their merchandise over the years."

Vidmar, who made a few hundred dollars by selling her stock, isn't optimistic about the company's future.

"I am really sorry to see what has happened to them," she said. "It just makes me sick to see them drop down so far. But it doesn't look good."

Stockholder Vern Simmons, a former Gottschalks employee, also holds out little hope for the company.

Simmons left Gottschalks four years ago and owns 251 shares.

A former director of financial planning, Simmons believes the company should have been more careful with its spending.

Gottschalks reported assets of $288.4 million and debts of more than $197 million as of Jan. 3.

"The economy is partly to blame, but they should have been strong enough to withstand that," Simmons said.

As for his 251 shares that Friday were valued at $27.61, Simmons said: "I guess I can wallpaper the bathroom with it."

Irene Bourzac, who has 85 shares, sees it differently. She knows her stock is worth less than $10 and like Simmons, she also is a former employee.

But she's not selling.

"I know it is not worth much," Bourzac said. "And I feel bad for what is happening. But the store still means something to me."

The reporter can be reached at brodriguez@fresnobee.com or (559) 441-6327.

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