Blame it on the economy, the digital revolution, and a huge debt. These are the culprits that Family Christian Stores (FCS)—the nation’s largest Christian retail chain, with 266 stores in 36 states—said pushed it into bankruptcy this year.
Three years ago, FCS bought itself back from private equity owners. In 2013, it promised to donate all profits to serving widows and orphans around the world.
Since then, the company has contributed $300,000 to charities—a small sliver of the $450 million in gross sales it generated over the same 2 years. This shows how slim the profits really were, according to Christian literary agent Steve Laube. (FCS gave away another $1 million by asking customers in stores directly for donations.)
When FCS filed for Chapter 11 bankruptcy in February, it owed $57 million to lenders and $40 million to suppliers and vendors. “I wish that we had alternatives, but we do not,” said president and CEO Chuck Bengochea.
Carrying debt is a normal part of business, said Michael Anderson, president of the Association of Christian Economists. But “when plans go awry,” he said, “it has to be resolved in a way that is fair to everyone.”
FCS hopes to resolve its debts without any layoffs or store closures, but the collapse has pained Christian publishers, trade vendors, agents, and authors. Barbour Publishing announced layoffs, naming the FCS bankruptcy as a factor. Hendrickson Publishers stated that receiving no payment would “pose a very difficult financial burden.” Additional publishers delayed royalty payments.
Dozens of Christian publishers sued FCS over its initial proposal to use $20 million worth of consignment inventory ...1