Shipley’s Family Clothing Store to Close : Retail: Without its prime supplier of jeans--Levi Strauss & Co.--the Southland chain says it cannot survive.

HUNTINGTON BEACH — For more than two decades, Shipley’s Family Clothing stores combined its folksy appeal and civilized prices on Levi jeans to hold its own against the Gaps and Miller’s Outposts of the world.

But on Tuesday, Shipley’s owners said they are closing the 10-store chain and terminating about 150 employees after a liquidation sale because their prime supplier, Levi Strauss & Co., was cutting off its supply. Without Levis, they say, the chain cannot survive.

The decision underscores the lifeline relationship that some retailers face with key suppliers: No merchandise; no store.

“Levi’s accounted for more than 40% of our stores’ business, and if you look at indirect sales . . . it stands for more,” said David Fleming, president of parent Shipley’s Industries Inc. in Huntington Beach.

The chain, which had revenue of $11 million in its most recent fiscal year, ran afoul of a Levi Strauss policy that forbids resales to wholesalers or other dealers. Shipley’s denied violating the agreement.

Levi Strauss decided to end its relationship with Shipley’s in August, Fleming said. After a few months, Levi had reversed its position, however, and decided to allow shipments after Shipley’s met new credit and management conditions. The jeans maker had another change of heart last month, and the ban was reimposed.

Shipley’s has sued Levi Strauss over the decision, and the matter is scheduled to be heard in April. A Superior Court judge recently denied a temporary injunction that would have forced Levi to continue shipping merchandise.

“We made every possible effort to forestall this action and its consequent hardship on those valued employees,” Fleming said. Employees will stay on the job for the liquidation sale, which starts Friday and runs through March.

John Onoda, a vice president for Levi Strauss, said the San Francisco-based casual apparel maker has a strong “no wholesaling” policy that is made clear to its retailers. The policy is strictly enforced to avoid sales in unapproved outlets that might sully its image, such as at swap meets and other super-discounters. At such venues, the company lacks control over how the merchandise is presented. Onoda declined to comment directly on the Shipley’s case because the matter is being litigated.

Shipley’s began in 1972 with a single store in Long Beach called The Joint. “It seemed like a good name for the ‘70s,” said Fleming, stepson of founder Fred Handal.

Because of the current problems, stores in Costa Mesa, Placentia, Tustin and Long Beach have already closed. The remaining stores are in Laguna Hills, Huntington Beach, Los Alamitos, Orange, Anaheim and Lakewood.

At the flagship Huntington Beach store, manager Ray Ross was busy supervising the 50% to 80% markdowns in preparation for the liquidation sale, consoling emotional employees and tending to his last duties as the corporate advertising manager.

“I feel kind of confused, but it’s nothing that can’t be worked out,” said the veteran of 40 years in retailing.

Ross knows so many customers that he said he had to buy a second Christmas tree last month to lay out all the presents they gave him--from homemade raviolis to bottles of Amaretto. He points to advertisements on the wall in which favorite customers and sales clerks model the clothes.

Ross said the store was a success because of superb customer service. “No one leaves the store without a smile.”

Customers said they will miss Shipley’s. “I’m going to be sad,” said Carma Dahl of Fountain Valley, a mother of six who has two children working in the store. “I like their type of clothing. They have been very competitive.”

Steve Brown of Yorba Linda, who was trying on Sperry Topsiders marked down to $20 a pair from about $70, said: “It’s a shame to see the small guys losing out to the big guys.”