Crown to Close 16 Bookstores in Southland

Crown Books Corp., which filed for bankruptcy about a month ago, said Tuesday it will soon begin closing dozens of bookstores, including 16 in Orange and Los Angeles counties.

The stores will be shuttered as soon as Crown gains permission from the bankruptcy judge, said Steve Pate, vice president of operations for the Landover, Md.-based company.

“We will close the doors and then return the merchandise to the vendors,” he said.

Crown Books--which filed for bankruptcy reorganization July 14 in Delaware--announced earlier this month that it would shut down 79 of its 174 stores and halt all operations in Seattle, Philadelphia and Texas. The company said at the time that it would retain a strong presence in some areas, including Los Angeles, San Diego and San Francisco.

Crown Books operates 51 stores in Southern California. In Orange County, Crown plans to close stores in Fullerton, Huntington Beach, Irvine, Tustin and Anaheim Hills.

The 11 stores being closed in Los Angeles County are in Studio City, Glendale, Northridge, Lakewood, Santa Clarita, Thousand Oaks, West Hills, Malibu, Burbank, Pasadena and Encino.

The company also plans to shut down one bookstore in Escondido and seven in San Francisco.

In all, 1,250 workers will lose jobs, including employees in the corporate office.

Most of the targeted stores will close simultaneously, Pate said.

“We are pruning back to the profitable base of stores,” Pate said. “We expect to stabilize, get through the rest of the year. And then it is our plan to go back into the growth mode, to open stores, next year.”

In Orange County stores Tuesday, employees were tight-lipped, saying they had been directed by the company not to discuss the closures. A worker in the Anaheim Hills store said employees learned just days ago that the closure was imminent, but they weren’t given details.

“All we know is that we’re closing,” the employee said.

Crown Books, which in recent years has suffered from slow sales and dwindling cash, was formed 21 years ago as a discount bookstore. For most of its history, the company’s discount strategy was successful, Pate said.

But as larger bookstores began opening--sometimes across the street from Crown Books--the company began to lose its focus, he said.

Much of the company’s competition in recent years has come from Barnes & Noble Inc. and Borders Group Inc., which thrived by building bigger stores and selling books on the Internet. Crown Books does not sell via the Internet, Pate said, and has no immediate plans to do so.

Crown books responded to the new competition by opening Super Crown stores, which were larger than their original stores but still smaller than the major competitors, Pate said.

“There was a strategic decision to try to do a smaller version of what they were doing,” he said. “It failed.”

But Pate said the company’s main problem was backing away from the discounts that originally made it popular with customers. While Crown continued to mark down merchandise, the discounts weren’t as steep as previously. And the company neglected to promote the discounts, Pate said.

“We fuzzed up what made us different from anybody else,” he said. “We quit talking about discounting. What good is a secret discount?”

Now, with a new management team in place, he said, “we’ve put the focus back on the discounting.”

Crown Books is part of the Dart Group, which was recently acquired by Richfood Holdings Inc. Last year, Crown lost nearly $50 million on sales of $300 million, Pate said.

The company’s stock, which had skidded to less than $1 a share shortly before the bankruptcy, closed Tuesday at $1.03, down 9 cents, in Nasdaq trading.