Z Gallerie emerges from Chapter 11 bankruptcy

Z Gallerie, a privately-held retailer of home furnishings and decorative accessories, has emerged from Chapter 11 six months after filing for bankruptcy protection.

The Gardena company said in its April filing that the economic recession, plus widespread markdowns and going-out-of-business sales at its competitors, had hurt its business.

Founded in 1979, the company now operates 54 retail locations in 18 states, a website and one outlet.

-- Andrea Chang

Consumer Confidential: Pizza, Enron and e-books

Here's your tantalizing Tuesday roundup of consumer news from hither and yon on the Web:

--When the going gets tough, it turns out the tough aren't eating pizza. Domino's Pizza Inc. has reported a steeper-than-expected drop in quarterly earnings -- a result, the company says, of more people preparing their own food during these recessionary times rather than ordering in. On the upside, though, Domino's says it's met with some success offering stuff beyond its usual crust-and-cheese lineup, especially sandwiches for lunch.

--He's baaack. Former Enron CEO Jeffrey Skilling will take his case to the Supreme Court, arguing that he was wrongly convicted of securities fraud, insider trading and lying to auditors, resulting in a 24-year prison term. Skilling says federal law was inappropriately applied in his case and that he was unable to get a fair trial amid "blistering daily attacks" in the media. I'm sure we're all sending good thoughts to the man who helped oversee the wipeout of more than $60 billion in shareholder wealth and $2 billion in Enron employee pension plans.

--Step aside, Kindle. Barnes & Noble is getting set to unveil its own e-book reader. The Wall Street Journal says the bookseller could roll out its device by next month, just in time for holiday sales. The B&N reader reportedly will have a six-inch screen, touch input and a virtual keyboard. Amazon.com has lowered the price for its Kindle to $259, so it's a safe bet that any new entrant to the e-book market will arrive near or below that level. My position remains unchanged: It'll take a pretty dazzling effort by any electronic gadget to woo me away from the myriad pleasures of the printed page.

-- David Lazarus

Watch out for foreclosure scams

Los Angeles County Dist. Atty. Steve Cooley warned homeowners today to be careful to avoid foreclosure-rescue scams.

Some companies offering to negotiate home loan modifications are instead opportunists who “promise quick results for a fee but actually provide nothing,” Cooley said in a news release.

The district attorney encouraged homeowners in financial crisis to consider contacting lenders directly to negotiate loan modifications.

People using third-party loan modification negotiators should “beware of promises involving the payment of substantial amounts of money or the deeding of your home to someone as a way to solve your financial problems.”

“In reality, these predators may steal your money, your home and your hope,” Cooley said.

Anyone looking for foreclosure assistance should consider contacting a housing counselor approved by the U.S. Department of Housing and Urban Development by calling (888) 995-4673, Cooley said.

Additional information about foreclosure fraud is available on the Los Angeles County district attorney’s website.

-- Stuart Pfeifer

San Francisco firm wins Eddie Bauer bankruptcy auction

Eddie Bauer fans rejoice: The struggling retailer said today that a San Francisco investment firm has won the bankruptcy auction for the  outdoor-clothing chain. And that means that most of the company's 370 stores in the U.S. and Canada will remain open.

Golden Gate Capital took the prize with a $286-million bid, Eddie Bauer Holdings Inc. said in a statement. The Golden Gate offer will be presented for court approval July 22.

Eddie Bauer, based in  Bellevue, Wash., attracted several bidders, including liquidators Great American Group, Hilco Consumer Capital and Gordon Bros. Group, as well as Iconix Brand Group Inc., which owns the Rocawear clothing. CCMP Capital Advisors made the initial $202-million offer as a so-called stalking horse, a court-approved bidder who gets the action going in exchange for a fee, in this case $5 million.

The liquidators wanted to sell off the assets of Eddie Bauer, which opened its first store -- a Seattle sporting goods shop -- in 1920. Golden Gate has agreed to keep at least 300 stores open, Eddie Bauer said.

This is Golden Gate’s second time at the dance. In 2006, the private-equity firm teamed with Sun Capital Partners to acquire Eddie Bauer, but the $285-million deal didn't win majority approval from shareholders.

Eddie Bauer shareholders likely aren't celebrating. The Golden Gate payout would flow to creditors, leaving shareholders with nothing.

-- Nancy Rivera Brooks

Photo: Pedestrians walk past an Eddie Bauer store along Chicago's Michigan Avenue last month. Credit: Getty Images

Crabtree & Evelyn files for Chapter 11 bankruptcy protection

Crabtree & Evelyn Ltd., maker of soaps and other bath and body products, filed for Chapter 11 bankruptcy protection today.

The Woodstock, Conn., company, which operates 125 retail stores in the U.S., said day-to-day retail operations in its stores and on its website would continue as usual. It also said it was hoping to reevaluate its real estate portfolio, strengthen its brand strategies and restructure its debt.

The filing does not include the company's international affiliates. Crabtree & Evelyn joins a growing list of retailers that have had to seek bankruptcy protection in recent months amid the economic downturn.

"The Crabtree & Evelyn brand remains strong," said Stephen Bestwick, acting president of the company. "We are confident that Chapter 11 gives us the opportunity to restructure the company with a business model that will be sustainable for long-term growth."

The privately held company reported in a court filing that it had debt totaling $10 million to $50 million and assets in the same range.

-- Andrea Chang

Photo: Crabtree & Evelyn has sold bath and body products for more than 30 years. Credit: Crabtree & Evelyn

Los Angeles company recalls 80,000 children's jackets

Winterbee Inc. of Los Angeles is recalling about 80,000 Speedy children's hooded zipper jackets and hooded pullover jackets because the garments have a drawstring through the hood, which can pose a strangulation hazard, the company and the Consumer Product Safety Commission said.

No incidents have been reported, the statement said.

In 1996, the commission issued guidelines to help prevent children from strangling on the neck and waist drawstrings in upper garments, such as jackets or sweatshirts.

The jackets, which cost about $10, were sold in several colors and in sizes S to XXL. “Speedy” can be found on a label on the inside of the collar. They were sold at sportswear and clothing retailers in the Los Angeles area from December 2004 through December 2008.

Consumers should immediately remove the drawstring or return the garment to where it was purchased or to Winterbee for a refund.

For more information, contact Winterbee, which also does business as Speedy, (888) 901-8067 between 9 a.m. and 5 p.m. Pacific time, Monday through Friday.

-- Nancy Rivera Brooks

Photo: Recalled zip-up Speedy garment. Credit: Consumer Product Safety Commission

Macy's to take over two former Gottschalks locations in California

Macy’s will open two new stores in California this year in former Gottschalks locations.

The stores are in the Central Valley: River Park in Fresno and Visalia Mall in Visalia, the company said today. Both are expected to open in the fall before the holiday shopping season begins.

Each store will offer apparel and accessories for men, women and children as well as a limited assortment of home merchandise. The two stores will employ a total of about 250 people.

"With these new locations, Macy's is expanding its presence and serving new customers in the important Central Valley market," said Terry J. Lundgren, chief executive of Macy's. "We look forward to offering a locally focused combination of fashion and value.”

In January, Gottschalks filed for Chapter 11 bankruptcy protection and in March said that it planned to liquidate. The 105-year-old Fresno chain sold fashion apparel, shoes, accessories and home merchandise through 55 department stores and three specialty apparel stores, mostly in California.

Forever 21 is expected to move into several former Gottschalks stores. The Los Angeles-based retailer of trendy, affordable clothing said last month that it had agreed to buy three former Gottschalks stores and to take over as many as 14 of the bankrupt department store chain's leases.

-- Andrea Chang

Eddie Bauer expected to file for bankruptcy protection

Outdoor-clothing company Eddie Bauer could file for bankruptcy protection as early as this week, according to a Bloomberg News report today.

The report cited five people with knowledge of the discussions and said Hilco Consumer Capital and CCMP Capital Advisors had expressed interest in bidding on the company's assets.

The Bellevue, Wash., retailer operates about 370 stores in the U.S. and Canada and has reported annual losses for the last three years.

Shareholders rejected the retailer's efforts to sell the company in 2007, thwarting its planned $285-million sale to two buyout firms.

-- Andrea Chang

Bankruptcy the 'best option' for more debtors

More debtors are running out of alternatives, leaving many with no choice but to file for bankruptcy, according to a Florida-based consultancy.

The number of people whose best option is determined to be bankruptcy protection jumped 42% in the first four months of this year compared with the year-ago period, according to InCharge Debt Solutions.

The organization, which conducts nearly 100,000 free credit counseling sessions annually, now reports seeing more than 700 clients daily who have filed for bankruptcy. In the fall, the average was 100 filers.

-- Tiffany Hsu

Forever 21 continues expansion by bidding for Gottschalks locations

After snapping up 15 former Mervyns leases last year, Forever 21 is at it again.

The Los Angeles retailer, known for its hip, affordable clothing, has agreed to purchase three former Gottschalks stores and to take over as many as 14 of the bankrupt department store chain's leases, according to Forever 21 Executive Vice President Larry Meyer.

"We're acquiring these locations which is consistent with our strategy to expand our fashion merchandise at great value to more customers," he said.

The deal has to be approved during a bankruptcy auction scheduled for May 28 and other parties can still submit overbids. Among the leases that Forever 21 hopes to acquire include locations in Riverside, Bakersfield and Hemet, Meyer said.

After filing for Chapter 11 bankruptcy protection in January, Gottschalks announced in March that it planned to liquidate. The 105-year-old Fresno chain sold fashion apparel, shoes, accessories and home merchandise through 55 department stores and three specialty apparel stores, mostly in California.

-- Andrea Chang

Forever 21 grows up and launches a contemporary line: Love 21

Forever 21's plus-size line: Faith 21