Chains claim bankrupcy; local outlets will likely stay open

Familiar companies are beginning to falter as cautious creditors and more selective shoppers squeeze on national retailers.

Linens N' Things.

The Sharper Image.

Bombay Company.

Mervyn's.

All four of those companies, which have operated stores in the Rio Grande Valley, are some of the most recent to file for bankruptcy this year. Mervyn's - the California-based department store with outposts in McAllen, Harlingen and Brownsville - was the most recent to announce its financial position is teetering on the brink.

But local economic observers say those chains that choose to keep some stores open are likely to preserve those in the Valley because of the area's booming retail market.

Linens N' Things has closed stores across the country while its store on Expressway 83 in McAllen continues to run.

Mervyn's has not yet released any plan on how it will restructure its

117 stores to get back into the black, but if other company leaders' downsizing plans are any indication, its McAllen store is likely to remain open. When corporations purge their "dead-weight" stores, the border region is rarely on their list, said Keith Patridge, executive director of the McAllen Economic Development Corp.

Despite a nationwide sales slowdown attributed to rising oil prices and the failure of the housing market, retail outlets in McAllen continue to outperform their northern counterparts, he said.

"For the most part, if the company is going to stay in business at all, we've been pretty fortunate in being able to keep those stores here," Patridge said.

Cash-strapped locals' weaker spending habits now are more likely to affect low-end retail like Mervyn's than luxury brands.

Wealthy Mexican shoppers have fueled most of the business at high-end stores in the Valley, but stores like Mervyn's are more dependent on local shoppers.

Nationwide, however, luxury brands are struggling.

The Sharper Image, which sold specialty electronics, and Bombay Company, a luxury furniture company, both opted to close all of its retail stores this year, pulling out of La Plaza Mall. Their long-term plans, whether to solely operate on the Internet or simply close down altogether, still aren't clear.

"We got caught in a problem that wasn't caused by our economy or what was happening here - it's part of that globalization of the world," Patridge said.

"With everything else that's buffeting the economy right now, with the subprime market and gas prices going up, the retail consumer is getting hit fairly hard."