By Alexandria Sage
SAN FRANCISCO (Reuters) - U.S. retailers are trying to assure customers that buying a gift card this holiday season is still safe amid a flurry of industry bankruptcies and store closures.
Store gift cards had become a popular option in recent years, boosting sales and profits at many a retailer when redeemed in the weeks following the holidays.
But in a dismal selling environment in which shoppers have dramatically cut spending and retailers from Steve & Barry's to Mervyn's have gone bankrupt, some shoppers are questioning whether the gift card option is still safe.
Retailer and catalog company Eddie Bauer Holdings Inc recently sent an email to its customers, citing a "hoax" email it said was "intended to discourage consumers" from buying gift cards at its stores and other chains.
Eddie Bauer, which sells clothing and products for the outdoors, assured customers of its "robust" online and catalog division and noted that the closing of some of its stores in January was part of the company's normal course of business.
The hoax email cited by Eddie Bauer, viewed by Reuters, warns customers of risks associated with gift cards, saying that stores planning to close after Christmas are still selling gift cards "even though the cards will be worthless January 1." The email's origins and the extent of its circulation could not immediately be verified.
Rather than just warning of bankrupt companies like Circuit City, Sharper Image Corp and Bombay Co, the email includes retailers that have decided to shutter certain stores to cut costs.
They include AnnTaylor Stores Corp, Lane Bryant, Pacific Sunwear of California, Gap Inc and JC Penney Co Inc.
Ann Taylor sent a message to customers citing "false and misleading information" being circulated, assuring shoppers that store closures were part of a strategic restructuring and that gift cards remain a popular option.
Gift card sales are expected to fall nearly 6 percent during the holiday shopping season, which kicks off this Friday, as shoppers try to save money by buying deeply discounted merchandise, according to the National Retail Federation.
Gap spokeswoman Kris Marubio said the apparel giant had been talking to customers, as well as landlords, to assure them that it was safe to buy their gift cards, which are redeemable online and in all stores and don't carry an expiration date.
"Yes, we're aware of it, yes, we've had calls from customers," Marubio said of the email. "There's absolutely no reason to be concerned about our gift cards."
ABC's "Good Morning America" also debunked the hoax email on its television program Tuesday morning, saying that while there was risk in gift cards from bankrupt stores, other retailers like Gap or Home Depot Inc were getting a "bum wrap."
Some bankrupt companies are still trying to preserve their ability to accept gift cards. A U.S. bankruptcy judge on Monday allowed Steve & Barry's to accept the cards throughout its liquidation, citing their benefit to sales. Continued...