JEMB Realty Corp. has agreed to buy the assets of the once-popular Daffy’s chain of discount clothing stores, which will rescue the discounter from bankruptcy.
The Manhattan-based real estate firm, owned by Morris Bailey, announced the move after the Secaucus, New Jersey-based Daffy’s filed for Chapter 11 bankruptcy protection. Neither party disclosed the agreement’s financial terms.
“JEMB Realty Corp. is looking forward to capitalizing on its long-term experience and knowledge in the greater NewYork area,” Bailey stated, “and to have the opportunity to work with Daffy’s with respect to the orderly wind up of Daffy’s operations and to provide payment in full to all of Daffy’s creditors.” The 51-year-old Daffy’s chain has been fighting an uphill battle for some time as it faced strong competition, lackadaisical consumer spending and volatile economic conditions.
Although Daffy’s 19 locations will be ending their run by October, JEMB expects to sublease 16 of the sites. Bailey’s firm has additionally agreed to purchase Daffy’s three remaining properties, which are located in East Hanover and Secaucus, N.J., and Philadelphia. JEMB Realty finalized an agreement in late 2011 to buy out Daffy’s from its three-story high, 97,000 square-foot Herald Square-area property for $10 million. It is now being marketed for a new retail tenant by CBRE Group Inc.
In its bankruptcy filing, Daffy’s listed assets of $60.2 million and liabilities of nearly $70.5 million. The company, which accumulated net sales of $151.3 million last year, together with a net loss of $11.4 million, owes money to more than 5,000 creditors. These include Steven Madden Ltd., to which Daffy’s owes $72,000, and sportswear retailer Nautica, to which Daffy’s owes $58,000.
“Operations during the last fifty years have generally been profitable,” Daffy’s declared in its bankruptcy filing. “In 2011, however, as a result of the continued economic downturn and increased competition in the discount fashion market– including an increase in online discount retailers – Daffy’s suffered a net operating loss of approximately $11,368,000.”
JEMB Realty owns and operates office towers, shopping centers, residential buildings and industrial properties.