Bedroom Superstore closing doors
By Clint Engel -- Furniture Today, December 9, 2001
PHOENIX — The Bedroom Superstore, whose parent filed for Chapter 11 bankruptcy protection this summer, is calling it quits.
Parent Sun Valley Waterbeds has closed or is liquidating and closing all its bedding and bedroom specialty stores except for a handful of locations sold off in Utah, California and Nevada.
Sun Valley's 19 stores, operating as The Bedroom Superstore and Sun Valley Furniture, were ranked No. 88 on Furniture/ Today's Top 100 with furniture, bedding and accessory sales of nearly $60 million in its fiscal year ended Sept. 30, 2000.
At the time of the bankruptcy filing, President Sam Fees said a difficult retail environment was hurting the business. In July, the company said it was closing its four stores in Utah and Wisconsin, but would continue operating 15 in Arizona, California and Nevada.
"Its initial analysis was that its expansion into Utah and Wisconsin, and maybe even Nevada, took it away from its core business structure in Arizona and northern California," said Chris Bayley, an attorney representing Sun Valley in the bankruptcy.
Sun Valley hoped to exit those secondary markets and focus on the core. But Bayley said that soon after the filing, key officers quit, including Fees and Joe Kovac, chief financial officer.
At the same time, Sun Valley realized it was going to be difficult to slash expenses fast enough to keep in step with diminishing sales, especially in Arizona's weak retailing climate.
"The dagger through the heart of Bedroom Superstore was the Sept. 11 terrorist activities," Bayley said, noting it froze consumer spending on luxury goods. "With all those forces coming together, we found that we were unable to salvage the business."
Sun Valley then looked at selling the business as a going concern or liquidating, and ended up doing some of both.
The company is about to begin going-out-of-business sales at its two Wisconsin locations, expecting them to run through early 2002, Bayley said.
All four remaining Arizona stores are holding GOB sales, run by SMG Groups, which should be completed later this month.
Bayley wouldn't say how much the sales are expected to generate, but noted the environment for selling furniture is extremely competitive. The Phoenix market, for example, has been inundated with GOB sales by chains including House2Home, Krause's and HomeLife.
In Nevada and northern California, however, The Bedroom Superstore name appears poised to live on. Omega Business Trust bought inventory, other assets and the right to use the name at stores in Reno, Nev., and in Sacramento, Fremont and Stockton, Calif., Bayley said.
The new owner, led by principal Steve Spaudie, working with John Candell — a former vice president of stores for Bedroom Superstore — is assuming about $750,000 in secured debt that Bedroom Superstore owed to Spring Air.
Under the agreement, Omega also will pay the bankruptcy estate $500,000 over a one-year period and assume liability for the leases of the four stores, Bayley said.
Candell referred questions to Spaudie, who would not comment.
In the Salt Lake City area, Ed O'Brien, chief executive officer of the two-store Crown Bedrooms, acquired two Bedroom Superstores in Ogden and Murray, Utah.
O'Brien has renovated the stores and renamed them Crown Elite Bedrooms, mixing Bedroom Superstore's starting line with Crown's step-up goods.
"We've turned them into real nice specialty bedroom stores," O'Brien said, noting he will close his two, much smaller Crown stores next year.
Key suppliers for Crown Elite include Oakwood Interiors, Texture Designs, Oak Tree, Blackhawk, Temperpedic, Spring Air, Serta and International Bedding.
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