History
The history of Filene's Basement is intertwined with that of the venerable Filene's chain. In 1908, Edward A. Filene, son of the founder of Filene's, William Filene, came up with the idea of selling surplus, overstock, and closeout merchandise in the basement of his father's store. Filene's "Automatic Bargain Basement", as it was originally called, opened in 1909 beneath the Downtown Crossing location.[7]
Filene's Basement, and its sister company, Filene's Department Store, were wholly owned by Federated Department Stores of Cincinnati. The two entities shared many operating systems, including payroll, benefits, and a common credit card. Top executives, at the time, included: Sam DiPhillippo (Marketing), Audie Dunham and Kathleen Collman (HR).
Following the ill-fated acquisition of Federated by Campeau Corporation of Ottawa, Filene's Basement was spun off. It became a privately held venture in a LBO arrangement led by then-CEO & President Jim Anathan, Chairman Sam Gerson, and other investors. The entity became known as "Filene's Basement, Inc." and remained headquartered in Wellesley, Massachusetts.
In April 1988, Filene's was purchased and acquired by May Department Stores, and the fortunes of the stores diverged. Filene's Basement, now a separate company, embarked on a massive but ill-advised strategy of expansion that, ten years later, in August 1999, forced the chain to seek Chapter 11 bankruptcy protection; more than 30 outlets were shuttered.[8] Filene's Basement's journey through the bankruptcy process was brief, and expansion soon resumed, albeit more cautiously.[9]
In March 1999, the company debuted a new weekend warehouse store concept, Aisle 3. The stores, averaging 60000 sqft, operated only Friday through Sunday and were located near major metropolitan areas.[10] Plans were to open at least 10 stores by the end of 1999 and 40 to 50 stores in the following years, but ultimately only eight opened. All Aisle 3 location were closed following the purchase of Filene's Basement by Value City Department Stores Inc. (later Retail Ventures, Inc.) in March 2000. Soon afterward, three Filene's Basement locations reopened in the vicinity of Washington, D.C., and modest efforts at expansion resumed.[11]
In 2006, Macy's Department Stores purchased the original Filene's chain. Because many store locations between the two chains did not overlap, most Filene's locations were spared and reopened as Macy's, but the flagship location (which sat across the street from an existing Macy's store) was not. Macy's shuttered the Filene's in Boston's Downtown Crossing, directly above the flagship Filene's Basement location, and sold the building for redevelopment. That Filene's Basement location was subsequently closed on September 3, 2007, to accommodate the redevelopment project.
At the time, plans were announced to reopen Filene's Basement in the same location in 2009 (although the announcement also claimed there was no legal obligation to do so). Boston Mayor Tom Menino expressed concern that the chain was not able to find a temporary location for the store during the two-year renovation, saying they "could have found a location in the city if they really wanted to continue the business."[12] However, Filene's Basement had already opened a second Boston store in 2006, one mile away from the flagship store, on Boylston Street near Copley Square. Due to a number of factors, renovations on the Downtown Crossing site came to a halt during late 2008, leaving the building partially gutted; as 2009 came to a close, Filene's Basement had not moved back into their former space, as originally planned.
Bankruptcy and sale
The economic crisis took its toll on the chain, and owner Retail Ventures, Inc announced on January 20, 2009 its plans to close 11 of the chain's 36 stores.[13] The store closures did not help, and on April 22, 2009, Retail Ventures, Inc. announced that it had sold the remaining 25 Filene's Basement stores to the Buxbaum Group, a company that specializes in liquidations. The Buxbaum Group did not indicate what it would do with its acquisition, although Retail Ventures had previously indicated that the company's future was uncertain.[14] The store officially filed for Chapter 11 bankruptcy protection on May 4, while real estate investors Crown Acquisitions and the Chetrit Group offered $22 million to purchase the name and leases on 17 of Filene's Basement's most profitable stores. They announced that they would keep the stores open and focus on castoffs from luxury-goods makers.[15] On June 15, 2009 Syms and Vornado were declared the winners of the bankruptcy auction of Filene's Basement's assets when the Syms-Vornado group agreed to pay 62.4 million dollars, subject to bankruptcy court approval.[16]
