Leath closing Modernage
Retailer remains mum on fate of Leath chain
By Clint Engel -- Furniture Today, April 15, 2007
Atlanta — Leath Furniture is closing all seven of its Modernage stores in Florida, and began going-out-of-business sales on Saturday, April 14.
"A multitude of factors" led to the closings, said Roy Hester, a Leath investor and vice president of sales for liquidator Planned Furniture Promotions. He cited tough competition, advertising costs, and Florida's poor housing market and skyrocketing insurance rates.
PFP had been running "Save our stores survival sales" at all Modernage stores except those in Stuart and Vero Beach, Fla. The GOB sales have started at six stores, and the Fort Lauderdale store will follow shortly, Hester said. They're expected to run for 45 to 60 days.
He would not disclose sales projections, but said PFP will not bring in goods beyond what's already on the floors and in the warehouse. He also said the properties are being aggressively marketed.
Atlanta-based Leath was acquired by SB Capital Group, a division of Schottenstein Stores, and several PFP executives and Leath management last summer. SB Capital has declined to comment on the current situation.
The new owners began dismantling Leath's corporate headquarters last month and have launched high-impact sales at the 20 Leath stores in Midwestern markets.
Sources familiar with the situation have told Furniture/Today they believe these sales are precursors to liquidation.
Hester has declined to comment, saying only that "all possibilities are being considered, including aggressively looking for a purchaser."
A television station in the Peoria, Ill., market reported Leath was shutting down, quoting an unnamed sales executive who said he heard it from Leath management.
Leath has let go over half its 30 Atlanta employees, including merchandising and advertising teams.
Leath CEO and investor Ron Phillips has resigned, but was expected to remain a consultant. He has declined comment.
At a March 21 meeting of Leath store managers and PFP representatives, managers were told that Leath owners were trying to find a buyer, but that PFP would begin taking over store operations.
Store managers would be allowed to stay for a "process that would take anywhere from 90 to 120 days," a former store manager told Furniture/Today. The manager took the "process" to mean the time it would take for PFP to come in, replenish depleted inventory and run closing sales.
Leath/Modernage was No. 66 on Furniture/Today's Top 100 list of U.S. furniture stores last year, with estimated 2005 sales of $106.8 million.
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