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Ritz Camera Files Ch. 11

Just days before the opening of the PMA trade show, the country’s largest specialty camera chain, Ritz Camera, filed for Chapter 11 bankruptcy protection.

The filing was made in Wilmington, Del. According to reports, Ritz said it has between $100 million and $500 million of both assets and liabilities.

In addition to Ritz Camera stores, the chain owns Wolf Camera, Kits Cameras, Inkleys and the Camera Shops, in addition to the Boater’s World chain.

Ritz is privately held and reportedly earned close to $1 billion in revenue last year, of which approximately $580 million was generated from its consumer electronics/camera operations.

The company suffered from both its camera and boating business. Its lenders had ordered it to boost reserves, and the company’s boating chain had been hampered by previously rising gas prices, Ritz said in an affidavit.

The chain also said it was pinched by a reduction in photo finishing revenues.

Ritz said it will seek court permission to obtain $85 million of financing to keep operating while it restructures.

Ritz Interactive, an e-commerce firm that licenses the Ritz name, has not been impacted by the filing, a spokesman said. “We will continue to work with them as a distributor, but we source through multiple distributors so we have other options.”

The chain, which had successfully escaped and indeed profited from the consolidation of the specialty market following the introduction of digital photography, finally succumbed, said Chris Chute, research manager, IDC.

“Ritz had tried to become a ‘destination’ store, but they had a lot of mall locations which made that difficult,” Chute said. While they enjoyed success with the growth in digital-SLR sales — about a third of which pass through specialty retailers — they couldn’t recoup the revenue lost from the decline in photo processing, he said.

The photo specialty’s meager share of the processing market shrunk still further from 4.1 percent in 2006 to 3.1 percent in 2008, according to PMA. In digital alone, the specialty channel captured only 3.2 percent of digital prints at retail.

“If they do emerge from Chapter 11, there’ll be a lot fewer stores, concentrated in urban areas,” Chute predicted. “They’ll focus on being the destination store, and move away from the mall stores.”

Ritz Cameras was ranked No. 28 in TWICE’s Top 100 retailers of 2008, with 1,100 stores and $580 million in CE sales last year.