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Many brands performed vanishing acts in 2008

NEW YORK – Shoppers won’t be picking up ornate lamps from the Bombay Co. in the coming year. Or investing with Lehman Brothers and Bear Stearns. Nor flying to Hawaii on Aloha Airlines or buying ultra-cheap tickets on Skybus, either.

All those names vanished this past year, victims of the economy, the financial meltdown or other factors. Experts say 2009 could mark the end of even more well-known brands as the now-yearlong recession puts more struggling companies on life support.

“I think 2009 is going to be a bloodbath,” said Scott Testa, a marketing professor at St. Joseph’s University in Philadelphia. “I think it’s going to be very, very ugly.”

For some companies, 2008 was no beauty. The woes of the nation’s retailers began before the year even started. The Bombay Co., known for its home accessories and furnishings, filed for bankruptcy last fall and shuttered the last of its stores in January because of slow sales – an ailment that hurt other companies as the economic downturn turned into a recession.

The casualties weren’t limited to retail. Travelers also bid adieu to some airlines in 2008 as jet fuel prices soared and consumer spending on extras like travel plunged. Aloha, ATA, Skybus and Champion Air all grounded their planes.

And two of the biggest names that disappeared this year took the economy and consumer confidence down with them.

Bear Stearns was headed toward collapse in March, awash in massive losses from toxic securities tied to subprime loans, before the government engineered a fire sale of the 85-year-old investment bank to JPMorgan Chase & Co. And the credit crunch that paralyzed the world economy only got worse after Lehman Brothers, a 158-year-old company that helped finance America’s railroads, became the biggest bankruptcy in U.S. history.

The ripple effect those two failures had on the economy was evident at malls across the nation. Consumers, already nervous about the falling value of their homes and the security of their jobs, curtailed their spending even more.

With sales and profits dropping this year and lenders leery of granting new credit, a number of retailers failed. Home goods seller Linens ’N Things began liquidating its stores after originally filing in May for Chapter 11 bankruptcy protection. Apparel chain Steve & Barry’s did the same later in the year. Catalog retailer Lillian Vernon Corp. and specialty retailer Sharper Image Corp. also vanished. KB Toys is in the midst of restructuring its business and is liquidating its more than 400 stores.

Of all the brands to disappear in 2008, Testa said, consumers may miss department store chain Mervyns the most since so many shoppers had a connection to the store.

“That’s a brand that’s been around for a very long time,” he said.

Mervyns, which had been operating for five decades, said in October that it would have to liquidate its stores after filing for bankruptcy protection this summer.

The shakeout among companies this year will give sturdier brands a chance to shine and set them apart from their less-than-prosperous counterparts, experts said.

Testa said the economic Darwinism will mean only the strongest stores survive, and they’ll use the downturn to get more powerful.

“The really smart companies, when things are bad, take the opportunity to really grow their brand,” he said.