America's Largest Christian Bookstore Chain Files for Bankruptcy
Family Christian Stores (FCS) has filed for Chapter 11 bankruptcy protection. Yet the ministry assured customers yesterday that it "does not expect" to close any of its more than 250 stores or lay off any of its approximately 4,000 employees.
“We strive to serve God in all that we do and trust His guidance in all our decisions, especially this very important one,” stated FCS president and CEO Chuck Bengochea. “We have carefully and prayerfully considered every option. This action allows us to stay in business and continue to serve our customers, our associates, our vendors and charities around the world.” [Full announcement below.]
With 266 stores in 36 states, FCS is the nation's largest chain of Christian stores as measured by locations, not sales. (For comparison, LifeWay Christian Resources has 185 stores in 29 states.) In 2014, FCS generated $216 million in gross revenues, notes Randall G. Reese at Chapter 11 Cases.
FCS bought itself back from private equity owners in 2012 and pledged to donate 100 percent of its profits to widows and orphans. One example: It partnered with Karen Kingsbury to donate 2013 Black Friday sales to help Haiti orphans. FCS recently expanded into filmmaking, with 90 Minutes in Heaven to be the first of a planned two movies made each year.
In a video message to customers, Bengochea named the recession, the digital revolution, and the company’s debt load as factors leading to FCS's bankruptcy.
“I wish that we had alternatives but we do not,” he said.
On its FAQ page, FCS stated that it moved forward with bankruptcy “after much prayerful consideration and only after working to cut costs and taking other steps. We believe our only two options are to liquidate and shut down our stores or go through the Section 363 sale process and preserve Family Christian Stores. When faced with these two options, we strongly felt that there was only one viable path to take.”
“Our customers will not see any change in operations during this process,” stated Bengochea. “After the court approves the sale, we can begin to reinvest in our stores and bring our customers products and services that will help us better fulfill our mission—to glorify God by helping people find, grow, share and celebrate their faith in Christ.”
FCS has no plans to ditch "brick and mortar" stores for an online-only presence. "Some could say that 'brick and mortar' retail is not relevant, but our new management believes differently," states its FAQ. "Our plan is make the necessary investments to our stores, diversify our product lines and craft a strong retail strategy that properly places the emphasis back on delivering a warm and positive customer experience."
FCS’s restructuring will be completed over the next two months as follows:
Through a newly formed subsidiary, Family Christian Ministries will serve as the lead bidder for the Section 363 sale process, putting forward a plan that acquires the streamlined organization’s assets and maintains operation of the chain’s 267 stores in 36 states, as well as its e-commerce site www.familychristian.com. Family Christian Stores is asking the court for a schedule to complete the sale process in about 60 days.
After the judge approves the sale, we’ll be immediately cash-flow positive and profitable. This process is similar to the one taken by the automobile and airline industries in recent years. We see this as the start of a fresh new day for Family Christian Stores and look forward to delighting our customers for many years to come.
Among our next steps are to make various capital improvements to our stores, as well as invest in an expanded product line and implement a new retail strategy that will enable us to better serve our customers.
Many of FCS' creditors are publishers notes Publishers Weekly:
Publishers are on the hook for millions of dollars led by HaroerCollins (sic) Christian Publishers which is owed $7.5 million. Other publishers owed large sums include Tyndale House ($1.7 million), B&H Publishing Group ($516,414), Faithwords ($537,374), and Barbour Publishing ($572,002). Ingram's Spring Arbor distribution arm is owed $689,533.
Last June, FCS named Bengochea as its new CEO after Cliff Bartow retired after 11 years in leadership. Bengochea had previously served as the CEO of The Original Honeybaked Ham Company and as a Coca-Cola executive.
Christian bookstores have experienced conflicting trends in recent years, as an overall sales surge masked mixed results for individual stores. The National Endowment for the Arts reports that in 2014, only 54 percent of Americans read a book (print or digital).
In 2013, 49 stores closed across the country, according to the Association for Christian Retail. This was an increase from 2012’s 39 store closures, but lower than the all-time high of 63 store closures in 2011. Additionally, 18 new Christian bookstores opened in 2013, an increase from 15 in 2012.
While 2013 sales increased by three percent, Christian retail failed to capitalize on Black Friday sales. In 2012, Black Friday sales rose 22 percent and a primary reason why the industry saw a 9 percent overall gain that year. Bible and book sales accounted for about 60 percent of the total sales for bookstores last year, according to CBA’s report.
CT has previously noted tensions between FCS and the Evangelical Christian Publishers Association in 2005, and editorialized on FCS's decision to sell on Sundays, among other coverage of Christian retail news.
CT also published a cover story on how to save the Christian bookstore (hint: stop making it so religious), noted how Christian publishers are searching for the next big thing, and reported how more and more churches are getting into the book business.
Here is the FCS statement:
FAMILY CHRISTIAN STORES RESTRUCTURING TO REINVEST IN STORES, IMPROVE THE CUSTOMER EXPERIENCE
Company’s plan keeps all stores open, prevents layoffs and strengthens the business
GRAND RAPIDS, Mich. — February 11, 2015 – Family Christian Stores plans to restructure and has filed for a sale of its assets and operations under Section 363 of Chapter 11 of the U.S. Bankruptcy Code.
Family Christian Stores does not expect to close any stores or lay off any employees.
“We strive to serve God in all that we do and trust His guidance in all our decisions, especially this very important one,” said Chuck Bengochea, who was named President and CEO of Family Christian Stores in July 2014. “We have carefully and prayerfully considered every option. This action allows us to stay in business and continue to serve our customers, our associates, our vendors and charities around the world.”
Family Christian Stores was purchased in 2012 by three businessmen and donated to Family Christian Ministries, a not-for-profit 501c3. Family Christian Stores operates in support of Family Christian Ministries’ mission partners and has a long history of giving to ministries serving widows and orphans.
A newly formed subsidiary of Family Christian Ministries will serve as the lead bidder for the Section 363 sale process. It will acquire the streamlined organization’s assets and maintain operation of Family Christian Stores’ 266 stores in 36 states, as well as its e-commerce sitewww.familychristian.com. Family Christian Stores is expecting to complete the sale process in about 60 days.
“Our customers will not see any change in operations during this process. After the court approves the sale, we can begin to reinvest in our stores and bring our customers products and services that will help us better fulfill our mission – to glorify God by helping people find, grow, share and celebrate their faith in Christ,” said Bengochea.
Family Christian Ministries also owns two other companies – iDisciple, an online source for Christian inspiration, messages, sermons and music; and Giving Films, a movie production company developing Christian movies. These two companies are not part of the restructuring and will continue to operate independently of Family Christian Stores.
[Photo courtesy of Consumerist - Flickr]