California Retailers and Manufacturers Reeling From Recession Losses

The recent liquidation of Mervyns and bankruptcy filing of Gottschalks Inc. — California-based chains — were benchmarks in a recession that has left stores throughout the state with fewer customers.

Clothing manufacturers are reeling from the retail weakness, resulting in some shutting down, while others take measures to cut staff, costs and inventory to survive. In addition, apparel businesses are bracing for negative fallout from an imminent 1 percent boost in the state sales tax, which was included in the legislative package that closed the state government’s record $42 billion budget shortfall.

"Most of us have just written off 2009 completely and are trying to focus on the better times ahead, what we hope will be 2010," said Fred Levine, owner of the M. Fredric chain of contemporary boutiques based in Agoura Hills, Calif.

The Los Angeles County Economic Development Corp. projects an estimated 6 percent drop in retail sales for the state's largest county this year, compared with a 1.1 percent decline in 2008. Measured by the number of residents, the average retail sales per capita in the city of Los Angeles equals $7,634 — versus $51,171 in Beverly Hills and $25,446 in West Hollywood.

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And the worst is yet to come for the retail sector, experts said. "We're still hemorrhaging so badly, we're not near the end of anything yet," said San Francisco-based retail analyst Bruce Katz. The market is going lower, unemployment is going higher and that hurts at all levels. There is certain to be more retail fallout, California chains like Bebe and Charlotte Russe are really struggling."