FORMERLY PE OWNED
Mervyn's
Includes Mervyns, Mervyn's Department Store
department store · Hayward, CA
- Year Acquired
- 2004
Three PE firms bought it from Target, immediately split the real estate from the stores, and settled for $166 million over fraud allegations.
What Happened
- Cerberus, Sun Capital, and Lubert-Adler bought Mervyn's from Target in 2004 for $1.25 billion — then immediately split the real estate into a separate company they controlled
- With the real estate carved out, Mervyn's had to pay rent on buildings it had operated in for decades. Those new costs drained the retail operation.
- While the stores starved for investment and inventory, creditors alleged the owners had pulled hundreds of millions out of the company in management fees and dividends
- Bankruptcy came in July 2008 and full liquidation by year's end. The PE firms later settled the resulting fraud suit for $166 million without admitting wrongdoing.
The Damage Done
- Every remaining store was liquidated by the end of 2008, ending a 59-year-old California department store chain after just four years of PE ownership.
- Over 18,000 workers lost their jobs without severance, and in many cases without weeks of earned vacation pay.
- Mervyn's had been a staple of middle-class shopping in California, the Southwest, and the Northwest. Its closing left empty storefronts in malls and shopping centers across the West.