Budget fashion retailer Daffy's to close all stores after 51 years as chain goes into liquidation
18:55 GMT, 17 July 2012
Budget fashion chain Daffy's Inc. is going out of business and will close its 19 stores in the coming months.
As a result of the liquidation, approximately 1,300 employees stand to lose their jobs.
Weak consumer spending and slowing sales in uncertain economic times are causing the chain to close.
Closing up shop: Retailer Daffy's Inc. has announced it is going out of business, closing 19 stores in the coming months
Among Daffy's 19 stores that will be closed, eight are located in Manhattan, six in New Jersey and one in Philadelphia.
Daffy's has not determined the date for the final liquidation of the business.
Employees of the Secaucus, N.J-based retailer, which sells various apparel brands for up to 80per cent off the original price, will remain employed and receive pay and benefits for at least 60 days.
A statement released by the firm said: 'This action was necessary due to the impact on its business of the uncertain economy and weak consumer spending and a lack of viable financial and business alternatives.'
No more discounts: The closure of Daffy's will impact 1,300 employees
Daffy's is not the first budget fashion
store to go out of business in recent months. Filene's Basement filed for bankruptcy late last year.
Syms Corp. and its subsidiary Filene's Basement liquidated all 46 of their stores earlier in the year.
Syms acquired Filene's Basement out of bankruptcy protection in the spring of 2009 for $62.4 million, but struggled to turn the chain around.
Daffy's faced slowing sales as what's known as the off-price arena became more competitive starting in 2005, according to Marshal Cohen, chief industry analyst with market research firm The NPD Group. That's when national brands started to expand their outlet business, leaving off-price retailers with fewer opportunities to buy discontinued items or leftovers.
Daffy's and others are also competing against department stores which offer similar discounts on the same brands.
Not enough shopping: Weak costumer spending is one of the reasons why retailer Daffy's Inc. is going out of business.
Meanwhile, Daffy's has faced stiff competition from TJX Cos Inc., which operates TJ Maxx, Marshalls, and HomeGoods, as well as Ross Stores Inc.
Both chains have been expanding quickly and have been able to pull in hot brands that are in the current season because of strong relationships with suppliers. Even though regular-price retailers and brands have been cautious in ordering and producing goods.
'In this business,' Mr Cohen said, 'you're only as good as the brands that you can get your hands on.'