39 HomeLifes sold so far
Top 100 chains snapping up leases
By Clint Engel -- Furniture Today, February 18, 2002
HOFFMAN ESTATES, Ill. — HOFFMAN ESTATES, Ill. — Nearly a dozen furniture retailers have snapped up 39 former HomeLife Furniture stores in a bid to capture some of the sales lost when the Top 100 company shut its doors.
As many as 65 eventually could return to the industry, a real estate expert estimates.
Woodbury, N.Y.-based Levitz Home Furnishings Inc., parent of the Levitz and Seaman's chains, is the biggest buyer so far with plans to convert up to 18 HomeLife leases to Levitz and possibly Seaman's units in five key markets.
But there are other winners, including Havertys, which plans to convert at least eight stores, and Rhodes and Bob's Discount Furniture (see story on page 77), each picking up three.
Wickes, Raymour & Flanigan, Leath Furniture, Harlem Furniture and Ethan Allen also are getting in on the HomeLife action.
"Because now is not the time for landlords to be sitting on dead rent, you can get the leases in almost all cases for what you would consider to be a bargain," said Ron Phillips, president and chief executive officer of Leath Furniture, a Top 100 company with 23 Leath stores in the Midwest and six Modernage stores in Florida.
Leath has acquired the lease on the 30,000-square-foot HomeLife store in Fort Wayne, Ind., which will replace its existing store in the market. It's also negotiating for another HomeLife in an undisclosed Illinois market, Phillips said.
In addition, Leath picked up two Heilig-Meyers stores — in Richmond, Ind., and Clinton, Iowa — and is trying to pick up two more. Heilig shut down its flagship division last year.
"The big opportunity for any furniture retailer, whether it's a HomeLife or Heilig-Meyers store, is that you can … get very good leases with basically no leasehold improvements," Phillips said.
Since the stores already are designed for furniture, the new owners mostly just need to hang their signs and open the doors, he said.
HomeLife, which had grown to 128 stores with sales of $680 million in 2000, collapsed last year after a turnaround plan failed and suppliers stopped shipments. The company filed for Chapter 11 bankruptcy protection in July and subsequently shut down, leaving most of its properties up for grabs.
Julius Feinblum, president of Julius M. Feinblum Real Estate, is working with DJM Asset Management to dispose of most HomeLife properties.
"A lot of space (is going back to) a variety of furniture retailers," Feinblum said. "These stores had a nice history of volume. Hopefully, these new players will increase the volume. It also means they will have to open more stores in some of those markets to fill in."
In addition to 39 stores already spoken for (see table), Feinblum said there are about 10 more HomeLife properties under negotiation, most with furniture retailers.
He estimates that about 65 of some 100 available HomeLife locations will return to the industry.
Atlanta-based Havertys, which had announced plans to take seven HomeLife stores, has upped that by at least one — a HomeLife in Daytona, Fla., — and may take more, said Jay Slater, president and chief executive officer.
Like Leath's Phillips, Slater said there are attractive expansion opportunities because prices are being driven down by the abundance of well-located big boxes on the market.
Havertys recently opened its third former Roberds unit, in Fayetteville, Ga., which "had the strongest opening of any store we've ever done," he said.
Slater wouldn't disclose the locations of the HomeLife stores Havertys still is looking at, but said he's also eyeing Service Merchandise units and other recently closed big boxes. By the end of the year, the company expects its store count to climb to about 110 stores from 104 today.
In Jacksonville, Fla., Mike and Aaron Gavronsky are preparing to open their third Furniture Mart store in a former HomeLife showroom with just over 30,000 square feet of space. The brothers saw the property listed on the Internet, and "the next thing you know we were signing an agreement for 2 million bucks," Mike Gavronsky said.
He estimated the new store would add $8 million to $10 million to the company's annual sales. More significantly, it will move Furniture Mart into the heart of a furniture shopping destination area near a regional mall, where Havertys, Rhodes, La-Z-Boy Furniture Galleries and Rooms To Go have clustered.
"We saw it as an opportunity to get there quick," Gavronsky said.
