Ernst is closing its doors
Chain's demise will put 2,000 employees out of work

By WARREN WILSON
SEATTLE POST-INTELLIGENCER REPORTER

Four months after they filed for bankruptcy protection, directors of ErnstHome Center announced yesterday they plan to sell the company's assets andclose its remaining 53 hardware and garden stores in mid-January.

A going-out-of-business sale will begin late this month or early next monthand continue through the holiday season, said Jim Fox, the company's vicepresident of marketing and advertising.

Twenty-nine of the stores are in Washington state. The remainder are inUtah, Oregon, Idaho, Montana and Wyoming, Fox said. The closure will affectabout 2,000 employees, he said, about half the number employed in July whenErnst sought protection under Chapter 11 of the U.S. bankruptcy code.

At that time, the company said it planned to restructure so it couldconcentrate on its most profitable stores. In yesterday's announcement, itsaid its directors had decided "that an orderly sale of its assets is in thebest interest of the company's estate and will maximize values."

The liquidation is subject to bankruptcy court approval. No liquidationplan had been filed with the court by late yesterday.

Ernst holds leases on the vast majority of its sites, Fox said, and willtry to market them during the going-out-of-business sale.

"There's value in the leaseholds," he said.

The decision, announced to employees early yesterday, seemed to surprise noone.

"It was inevitable because of the incredible competition they faced withthe big-box hardware stores coming on line - Eagle, Home Base, Home Depot, toname a few," said Jim Figel, who runs the investment brokerage group at TheNorman Co.

Rip Hoffman, who worked at Ernst for 15 years before retiring 12 years ago,said yesterday morning he had heard the news the night before from severalpeople and had discussed it with someone as far away as Boston.

"The Ernst grapevine is notorious," said the 78-year-old Edmondsresident.

Longtime customer Jack Hoag of Seattle said he hated to see Ernst's demisebecause the superstores pose difficulties for older, less mobile people.

"They're just hard to get around in," Hoag said.

They may have everything, but they're so big they're inconvenient andoverwhelming to some.

"You can get inside them and get lost," said Hoag, who shopped at Ernst'sUniversity Village store yesterday because the two stores nearest to his homehad already closed. "I'm in the minority now, but there are going to be moreof us."

What will replace the Ernst stores isn't certain.

The former QFC at University Village has been demolished and a RestorationHardware store is scheduled to open on the site, the first in the Puget Soundregion for the Bay Area-based home-furnishings chain.

That concept might be different enough to not rule out a traditionalhardware store, but The Norman Co.'s Figel said the region might still havemore of those than its needs, even without Ernst. "I think you'll still see ashakeout" among big hardware retailers, he said. He urged caution to anyoneconsidering that market.

"If you're another hardware store facing the competition that has poppedup over the last three to five years, you'd better have one heck of a conceptand one heck of a location," Figel said.

In the short term, the big stores will probably pick up most of Ernst'sbusiness.

"Eagle and Home Depot are the ones who will probably benefit the most,"said Jack Rothwell, co-owner and manager of Welch True Value Hardware on SouthJackson Street in Seattle. "'People who tend to shop at the larger storestend to go from one large store to another large store."

Small neighborhood stores serve a different purpose, specializing inconvenience and lots of free advice, said Ron Lewis, owner of GreenwoodHardware & Glass.

"You cut glass, you talk to everybody," Lewis said.

The stock market yesterday voted for Tukwila-based Eagle as the biggestwinner.

Its stock, which is traded on the Nasdaq Stock Market, rose 1 3/8 yesterdayto close at 28 7/8, and Dain Bosworth analyst Alan Rifkin said Eagle had onlybegun to see a boost from Ernst's demise.

"We believe that Eagle has just begun to realize incremental sales as aresult of the Ernst Chapter 11 filing in July," Rifkin said. "In ouropinion, Eagle could capture as much as $150 million in incremental sales fromthe Ernst closings."

He said he will review and probably increase his estimate of Eagle's futureearnings.

P-I reporter Bruce Ramsey contributed to this report.