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Goodbye, Gottschalks

Fresno-based department store chain Gottschalks, a fixture in the Northern San Joaquin Valley for more than a century, is entering its final days of operation.

Gottschalks' outlets, often anchor tenants in the shopping centers they occupied, started closing as soon as their shelves were cleared and sales dried up.

On Sunday, liquidators shut the Gottschalks stores in Fresno, Hanford and Oakhurst. On Monday, the Merced outlet closed its doors. The stores are the first in the San Joaquin Valley to close.

The two Modesto stores will continue operating this week, but not much longer. Officials at those stores couldn't give specific closure dates, though both are expected to operate at least through this weekend.

All the stores must cease operations by July 15.

Gottschalks filed for Chapter 11 bankruptcy protection in mid-January in hopes of either reorganizing its debt or finding a buyer, but it was unable to do either.

Liquidators acquired the retailer after a bankruptcy court's order to sell the company's remaining assets and merchandise to try to repay creditors.

The Vintage Faire Mall store, which occupies three floors, has only enough merchandise and fixtures left to fill the first floor. At some point, liquidators have said, the mall outlet and the one at Century Center would be combined because there wouldn't be enough merchandise left to justify keeping both open.

It wasn't clear Tuesday which of the two Modesto stores would close first, but Vintage Faire already has a tenant for its Gottschalks site, Los Angeles-based clothier Forever 21, which submitted the prevailing bid in a May 28 auction for some of the unexpired shopping center leases and real estate owned by Gottschalks. One of those leases was for the mall site.

Forever 21 typically occupies smaller stores, but company officials have said they have enough merchandise and customers to justify the move to larger sites. They said they plan to add merchandise to fill those spaces.

There was no bid for the Century Center site in east Modesto. It occupies three adjoining spaces that Gottschalks expanded into over the years as other tenants moved out. The two Modesto outlets were among the chain's top performers.

The eventual closure of the Century Center store will leave a major hole in that shopping center because no replacement has been lined up for all or part of the Gottschalks site.

Commercial real estate specialists consider Century Center an excellent location for a large retailer because it is in an area east of McHenry Avenue that's underserved.

But these professionals acknowledge there's not much expansion going on in the retail industry this year because of the recession. However, the Century Center site could provide some opportunities for local businesses looking for prime space that they otherwise might not be able to afford.

Such vacancies and the impending closure of all of Gottschalks' remaining stores is another in a series of blows to the Northern San Joaquin Valley's economy.

The region has been rocked by a dramatic downturn in the housing market, which recently has shown an improvement in sales. But job losses in construction, finance, real estate and related fields have spread to manufacturing, auto dealerships, restaurants and retailers.

Circuit City, Linens 'n Things and Mervyns also have failed.

Closure of Gottschalks, which employs about 5,000, means more than 80 people at each Modesto store will lose their jobs. With the unemployment rate in Stanislaus County at 16.3 percent, the highest in more than a dec-ade, finding jobs in the valley is difficult for displaced workers.

Gottschalks operates 58 department stores and three specialty apparel stores in six Western states, the majority in California. The company also has a large distribution center in Madera.

Bee business editor David W. Hill can be reached at dhill@modbee.com or 578-2336.

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