Retailers Gottschalks and Goody's file for bankruptcy

By Brad Dorfman

CHICAGO (Reuters) - Regional department store chain Gottschalks Inc said on Wednesday it filed to reorganize under bankruptcy protection, while apparel chain Goody's LLC plans to liquidate its remaining 282 stores in a return to Chapter 11.

The bankruptcy filings are the latest in a string by recession-racked retailers that have just finished with the worst holiday shopping season in at least four decades.

Restructuring experts see a wave of additional store closures and potential bankruptcies in coming weeks and months due to dismal sales and a credit crunch. And some see the largest U.S. chains weathering the storm better than their local and regional rivals.

"I'm more concerned about the second tier of retailers, not the large public companies," said Bob Carbonell, chief credit officer for retail credit rating service Barnard Sands.

"Those are the privately owned companies that are going to possibly surprise some of their creditors, because they don't give monthly and quarterly financial information," he said.

Privately held Goody's said that a "significant downturn in the national economy caused severe and unexpected financial pressures," and led to unexpectedly poor sales in the holiday season, according to a Tuesday filing with the U.S. bankruptcy court in Wilmington, Delaware.

Goody's, based in Knoxville, Tennessee, operates in 20 U.S. states, mostly in the Southeast.

Gottschalks, which operates 58 department stores and three specialty apparel stores in the western United States, said it will pursue options that include the possible sale of the company or another transaction.