Trimingham Brothers Ltd. ? Bermuda?s oldest and best-known department store ? will close its doors at the end of July with the loss of about 220 jobs.

The news follows several weeks of speculation that the store could either be sold or closed but will still be a shock to many after the flagship Front Street store moved to bolster its competitive advantage by taking over next-door rival HA&E Smith?s last year.

Staff were reportedly told they would be out of a job only an hour before Trimingham?s made its decision public in a Press statement released around 5 p.m. yesterday.

Trimingham Brothers president Lawrence Trimingham said: ?Having served the Bermuda community as a retail headquarters since 1842, the company has decided to bring to a conclusion the business enterprise over the next few months.?

Yesterday those close to the industry speculated that the Smith?s buy-out may ultimately have been Trimingham?s undoing by putting too heavy a burden of debt on the latter.

In its statement, Trimingham management said the success of the Smith?s acquisition had failed because sales and profitability targets were not achieved.

?Both Trimingham?s and Smith?s were underperforming over the last few years. The transaction was to allow both stores to gain product diversity and improved efficiencies. However, the process of implementing these changes has taken too long for numerous reasons. These delays have been one reason for sales not performing to required levels.?

But the company shot down speculation that the Smith?s acquisition had accelerated its demise.

?Many other factors in the business environment played a role in our ultimate decision to wind down the business.?

Mr. Trimingham also pointed to a decline in tourist spending on the Island, residents increasingly shopping overseas and the rising cost of doing business in Bermuda, as being behind the store?s decision to close.

?These are all challenges confronting the local industry and are basic reasons why the shareholders have decided to exit the retail business. We maintain a strong faith in Bermuda as a whole,? he said.

Whatever the reasons, the development will forever change the face of Bermuda?s retail sector, spelling as it does the loss of not one, but two of Bermuda?s oldest merchants. Trimingham?s opened its doors first as a dry goods store 163 years ago, while Smith?s was established in 1889.

In years past, the two flagship retailers and the Island?s third department store ? A.S. Cooper & Sons, established in 1897 ? earned Front Street its reputation as the place for both locals and tourists to shop for high-quality goods.

A.S. Cooper?s recently launched the demolition of their main store in order to redevelop the space during the next two years into both retail and commercial real estate premises.

The net result is that by the end of the summer there will be no department stores on Front Street, and only one on Reid Street ? Gibbons Company.

As for what will happen to the Trimingham?s space, it was revealed yesterday that the Bank of Bermuda is buying the property.

In addition to snapping up real estate that Trimingham?s owns (the building next to Smith?s), the bank is also buying the adjacent space to the east (which borders clothing store Calypso) that is leased by Trimingham?s from from Butterfield, Conyers and Watlington.

Trimingham?s legal counsel Wendell Hollis said the bank ? which was sold to multinational banking giant HSBC Plc last year ? had secured Government approval to buy the space. The sale follows new regulations being put in place that ban Bermudian owners from selling to foreigners.

?They [the bank] have obtained the appropriate permission from the Ministry of Finance to do the transaction,? he said.

In addition, the bank is buying out Trimingham?s warehouse space on Mill Reach Lane.

Trimingham?s Press statement yesterday said their decision to close was not because of bankruptcy or a case of the bank foreclosing on the property.

The store said its board of directors had agreed to sell after being unable to secure long-term financing to continue as a retail operation. Mr. Hollis said the store?s closure comes after three months of negotiations.

Proceeds from the sale were said to be earmarked for severance pay to employees, to cover operating expenses and to satisfy payables due to trade creditors.

Although Trimingham?s bought out Smith?s last year, the purchase was of the business not Smith?s property.

Yesterday Mr. Hollis said Trimingham?s had only been renting that property. ?We have reached an agreement with both Smith?s and the Bermuda Church Society [as the landlords] to return those properties with effect from 31 August.?

While Smith?s owns the majority of the space, the Bermuda Church Society was said to own the part of the building that houses Smith?s men?s department.

Smith?s board of directors said they were still assessing what they would do with the space after August.

Trimingham?s seven branch operations ? from St. George to Dockyard ? will also close at the end of July, according to Mr. Hollis.

?Basically this is an arrangement whereby the bank has bought our real estate and as a result the company has decided to go out of business, and realistically it was determined that the future was not positive for that type of business,? Mr. Hollis concluded, adding that separate arrangements were being made with the property owners of branch locations.

As for the bank?s plans for its newly acquired Front Street real estate, bank CEO Philip Butterfield said: ?The bank has some preliminary ideas for the redevelopment of this important site. A lot of work has yet to be done here and we will provide more details in the near future.?

The bank was mum on the price tag for the property, and would not be drawn yesterday on exact plans for the space except to say it planned to maintain the ?architectural integrity of the area?.

It is not known whether the bank may be given special zoning permission for non-retail operations on the Front Street and Reid Street floors of the property, with it understood that current zoning regulations limit use to of a retail nature.

Mr. Hollis said it would be up to the bank to seek any necessary approvals if their plans do not fall in line with existing zoning regulations.

?Quite frankly the bank has bought the property as is and there were no zoning conditions attached to the agreement,? he said.

Meanwhile, Mr. Hollis told The Royal Gazette last night that the latest estimate of the number of staff employed by the company was 220.

In the statement, Mr. Trimingham said the store?s first concern was its staff. All Trimingham?s staff will lose their jobs as a result of the closure. ?Our employees have demonstrated high levels of commitment, loyalty and performance over the years. We intend to keep the majority of employees until mid summer.?

He added: ?We will honour our severance obligations under the Employment Act to our employees as we wind down the retail operations.?