Yesterday I wrote about the pros and cons of giving gift cards and gift certificates as gifts. There were several comments left from people who prefer to give and receive gift cards, and I can certainly understand why. But this holiday season gift card buyers need to be a little more careful regarding where they buy their gift cards and gift certificates. With the current economic crisis, many stores are closing select locations, or shutting down for good.
Stores close, gift card holders lose
Gift cards and gift certificates are considered unsecured debt to the company; basically you give the company money and they give you an IOU which you can exchange for goods. But when a company files for bankruptcy, those IOUs are the lowest form of debt on the list. In many cases the stores will not have the goods or funds to honor those gift cards. When stores close, gift card holders are left holding the bag, meaning you will probably never receive any value for that card.
The worst part is – some stores that are planning to close after Christmas are still selling the cards through the holidays, even though the cards will be worthless January 1. There is no law preventing them from doing this. On the contrary, it is often referred to as “Bankruptcy Planning.” While this may seem unethical, and it is, it is not illegal.
Here is a list of stores that are undergoing changes this holiday season:
Ann Taylor closing 117 stores nationwide
Bombay closing remaining stores
Cache will close all stores
Circuit City filed Chapter 11
Dillard’s to close some stores
Disney closing 98 stores and will close more after January.
Eddie Bauer to close stores 27 stores and more after January
Ethan Allen closing down 12 stores.
Footlocker closing 140 stores more to close after January
GAP closing 85 stores
Home Depot closing 15 stores
J. Jill closing all stores (owned by Talbots)
JC Penney closing a number of stores after January
K B Toys closing 356 stores
Lane Bryant, Fashion Bug, and Catherine’s to close 150 stores nationwide
Levitz closing down remaining stores
Linens and Things closing all stores
Macys to close 9 stores after January
Movie Galley closing all stores
Pacific Sunwear closing all stores (also owned by Talbots)
Pep Boys closing 33 stores
Piercing Pagoda closing all stores
Sharper Image closing down all stores
Sprint/Nextel closing 133 stores
Talbots closing down specialty stores
Whitehall closing all stores
Wickes Furniture closing down
Wilson Leather closing down all stores
Zales closing down 82 stores and 105 after January
As you can see in this list, there may only be a few locations closing, but not all store locations. If your local store closes but other store locations remain open, you may be able to use your gift card at their other store locations, at their online store or sell your gift cards for cash.
As I mentioned in my previous article, gift cards are not a bad gift. In fact, many people prefer gift cards. But this time around you need to be careful which stores you buy gift cards to. Otherwise you may be flushing money down the drain.
See related articles:
Edit: Apparently Pep Boys is not closing any of their locations. I apologize to Pep Boys and their customers for the miscommunication.