Fedco Inc., the Southern California discount chain, is calling it quits after nearly 50 years, ending a unique experiment in altruistic retailing.
The members-only general merchandise store, which filed a voluntary petition under Chapter 11, said it had finally succumbed to competitive pressures from the mass merchant channel it had helped foment.
As part of the reorganization, the non-profit company, which ranked 71 on the TWICE Consumer Electronics Top 100 Retail Registry, will sell its 10 superstores, three appliance and furniture centers and other real estate to Dayton Hudson's Target Stores division for $120 million. Fedco said the sale will enable it to meet all its debts, payroll and other financial obligations in full, while providing member customers discount coupons valued at $300 for use in Target stores. Any remaining assets will be used to establish a non-profit foundation designed to assist other charitable organizations in Fedco markets.
Fedco was formed in the early 1950s as a mutual benefit, non-profit corporation to offer merchandise values and various services to benefit the community and its members. "However, in today's intensely competitive retailing industry, these discount shopping benefits are being adequately provided by other for-profit companies," said CEO Robert Stevenish.
The merchant had been in the midst of an extensive store renovation program, but was unable to generate sufficient cash to continue fueling the project. Target is expected to purchase the stores this fall following a final close-out sale, and will remodel or rebuild most of the sites and dispose of certain others.
Fedco, based in Santa Fe Springs, Calif., had consumer electronics sales of $87 million last year according to the TWICE Retail Registry, down 8.4% from the $95 million in CE products it sold in 1997.