8-K

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 8-K

                                 CURRENT REPORT
                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                        Date of Report: January 12, 1999



                        SERVICE MERCHANDISE COMPANY, INC.
- -------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           Tennessee                    1-9223                   62-0816060
- ------------------------------   -----------------------    -------------------
(State or other jurisdiction     (Commission File Number)   (I.R.S. Employer
     of incorporation)                                      Identification No.)


  7100 Service Merchandise Boulevard, Brentwood, TN               37027
- ------------------------------------------------------     --------------------
      (Address of principal executive offices)                  (Zip Code)



       Registrant's telephone number, including area code: (615) 660-6000



                                 Not Applicable
- ------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)



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Item 5.    Other Events
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       See attached press releases.











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                                   SIGNATURES


         Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.



                                          SERVICE MERCHANDISE COMPANY, INC.


Date: January 12, 1999                    By: /s/ C. Steven Moore   
                                             ---------------------------------
                                                 C. Steven Moore
                                                 Vice President









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                                  EXHIBIT INDEX





   No.                                              Exhibit
- ---------          ------------------------------------------------------------
                

  99.1             Press Release dated January 8, 1999.

  99.2             Press Release dated January 11, 1999.

EX-99.1

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                                  EXHIBIT 99.1

                                  PRESS RELEASE


The following is the text of a press release issued by Service Merchandise
Company, Inc. on January 8, 1999.

         SERVICE MERCHANDISE OBTAINS $750 MILLION FINANCING COMMITMENT

                             CLOSE TO NAMING NEW CEO

Nashville, TN (Jan. 8, 1999)--Service Merchandise Company, Inc. (NYSE:SME)
announced today that it has obtained a $750 million financing commitment from
Citibank. The Brentwood, Tenn.-based fine jewelry, gift and home products
retailer expects to finalize and close the financing facility in mid-January.
The financing would, among other things, enable the Company to repay its
existing bank facility and support the Company as it attempts to improve its
operations and return to profitability. The Company also said that it intends to
pay the interest due on its 9% subordinated debentures on or prior to January
14.

Gary M. Witkin, the former President and Chief Executive Officer of Service
Merchandise, has resigned to pursue other interests. The Company is in the final
stages of its search for a CEO and expects to name a new CEO shortly. Raymond
Zimmerman, the former CEO whose parents founded Service Merchandise, has been
named non-executive Chairman of the Board of Directors.

Mr. Zimmerman is upbeat about the Company's prospects for a turnaround. "Our
customers are loyal and our jewelry business remains among the strongest in the
industry. If we can meet our operational and financial challenges -- and we're
off to a great start with the new financing commitment -- we think we can return
the Company to profitability."

Service Merchandise employs approximately 25,000 associates and operates 347
stores in 34 states.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release includes certain forward-looking statements in reliance on
the "safe harbor" provisions of The Private Securities Litigation Reform Act of
1995. Any such forward-looking statements are subject to a number of risks and
uncertainties, including but not limited to the factors identified below. Actual
results may differ materially from those anticipated in any such forward-looking
statements. The Company undertakes no obligation to update or revise any such
forward-looking statements.



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The Company's liquidity, capital resources, and results of operations may be
affected from time to time by a number of factors and risks, including, but not
limited to, the ability of the Company to consummate its financing arrangement;
the availability of trade credit; terms with vendors and floor planning
arrangers; the Company's use of substantial financial leverage and the potential
impact of such leverage on the Company's ability to develop and execute
operating strategies; the Company's ability to withstand significant economic
downturns and to repay its indebtedness; the ability to fund and execute a new
strategic plan for the Company; the ability of the Company to attract and retain
key executives; competitive pressures from other retailers, including specialty
retailers and discount stores, which may affect the nature and viability of the
Company's business strategy; trends in the economy as a whole, which may affect
consumer confidence and consumer demand for the types of goods sold by the
Company; availability, costs and terms of financing, including the risk of
rising interest rates; the ability to maintain gross profit margins; the
seasonal nature of the Company's business and the ability of the Company to
predict consumer demand as a whole, as well as demand for specific goods; the
ability of the Company to attract and retain customers; costs associated with
the shipping, handling and control if inventory and the Company's ability to
optimize its supply chain; potential adverse publicity; availability and cost of
management and labor employed; real estate occupancy and development costs,
including the substantial fixed investment costs associated with opening,
maintaining or closing a Company store; and the ability to effect conversions to
new technological systems, including become Year 2000 compliant.

EX-99.2

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                                  EXHIBIT 99.2

                                  PRESS RELEASE


The following is the text of a press release issued by Service Merchandise
Company, Inc. on January 11, 1999.

            SERVICE MERCHANDISE APPOINTS BETTINA M. WHYTE INTERIM CEO

        COMPANY ENGAGES JAY ALIX & ASSOCIATES TO LEAD TURNAROUND EFFORTS

Nashville, TN (January 11, 1999)--Raymond Zimmerman, Chairman of the Board of
Service Merchandise Company, Inc. (NYSE:SME) today announced the appointment of
Bettina M. Whyte as interim Chief Executive Officer. Whyte, age 49, is a
principal of Jay Alix & Associates, who has been engaged by the Board of
Directors to lead the Company's turnaround efforts.

Whyte has more than 15 years experience serving leading major corporations
through financial and business turnarounds. Her most recent assignment has been
CEO of APS Holdings, a Houston-based automotive parts seller. Whyte has also
been involved in turnarounds and restructuring for Music Land, Business Land and
Edison Brothers, and companies in industries as diverse as healthcare,
manufacturing, transportation, technology and oil and gas distribution.

Zimmerman remarked, "The Board of Directors and the management staff are
delighted that Bettina has joined the team. Her experience and expertise will
play a pivotal role in returning Service Merchandise to profitability."

Jay Alix & Associates is a leading firm in the business of offering
underperforming companies both consulting and interim management to lead and
support implementation of strategic repositioning, operational turnarounds,
business development strategies and debt restructuring. The firm, which has
headquarters in Southfield, Michigan, and offices in New York and Chicago, has
extensive retailing experience with such clients as Interco, Inc., Hartmax
Corporation, Woodward & Lothrop, Leslie Fay and Cotton Ginny. Other clients have
included Unisys Corporation, National Car Rental Systems, Ryder Systems, Oxford
Health Plans, Figgie International, Phillip Services Corporation, Umbro
International, and AM International.

The Company also announced that James Poole, former Chairman, has decided to
retire and resign his seat on the Company's Board of Directors. Mr. Poole has
served on the Board since 1983.

Service Merchandise is a national retailer of fine jewelry, gift and home
products. The Brentwood Tenn.-based Company employs approximately 25, 000
associates and operates 347


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stores in 34 states. More information is available at the company's web site and
on-line store at www.servicemerchandise.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release includes certain forward-looking statements in reliance on
the "safe harbor" provisions of The Private Securities Litigation Reform Act of
1995. Any such forward-looking statements are subject to a number of risks and
uncertainties, including but not limited to the factors identified below. Actual
results may differ materially from those anticipated in any such forward-looking
statements. The Company undertakes no obligation to update or revise any such
forward-looking statements.

The Company's liquidity, capital resources, and results of operations may be
affected from time to time by a number of factors and risks, including, but not
limited to, the ability of the Company to consummate its financing arrangement;
the availability of trade credit; terms with vendors and floor planning
arrangers; the Company's use of substantial financial leverage and the potential
impact of such leverage on the Company's ability to develop and execute
operating strategies; the Company's ability to withstand significant economic
downturns and to repay its indebtedness; the ability to fund and execute a new
strategic plan for the Company; the ability of the Company to attract and retain
key executives; competitive pressures from other retailers, including specialty
retailers and discount stores, which may affect the nature and viability of the
Company's business strategy; trends in the economy as a whole, which may affect
consumer confidence and consumer demand for the types of goods sold by the
Company; availability, costs and terms of financing, including the risk of
rising interest rates; the ability to maintain gross profit margins; the
seasonal nature of the Company's business and the ability of the Company to
predict consumer demand as a whole, as well as demand for specific goods; the
ability of the Company to attract and retain customers; costs associated with
the shipping, handling and control of inventory and the Company's ability to
optimize its supply chain; potential adverse publicity; availability and cost of
management and labor employed; real estate occupancy and development costs,
including the substantial fixed investment costs associated with opening,
maintaining or closing a Company store; and the ability to effect conversions to
new technological systems, including become year 2000 compliant.