Levitz may be headed to bankruptcy court
Sources say a buyer or more liquidity could save chain
Clint Engel -- Furniture Today, November 7, 2007
NEW YORK — The Levitz Furniture chain appears to be headed to bankruptcy court for the third time in 10 years if it doesn’t nail down a buyer or additional liquidity quickly.
Financial and other sources say the retailer has burned through cash since it was bought out of bankruptcy two years ago by Prentice Capital Management and liquidator Great American Group. Investment firms have made at least two cash infusions in the company this year.
Now, sources are speculating that the company will file for Chapter 11 bankruptcy protection again as early as this week, propelled by “investor fatigue.”
“They’ve been looking for additional sources of liquidity or capital through most of this year,” one source said. Unless someone throws the 77-store retailer a lifeline soon, it will have to file, the source added.
Six suppliers, who declined to be named, have confirmed to Furniture/Today that they have stopped shipping the retailer. Most have made the decision since the High Point Market in early October.
Levitz Chairman and CEO Larry Zigerelli could not be reached for comment.
The Levitz chain, under other corporate names, filed for bankruptcy back in September 1997 and then again in October 2005, owing its largest industry creditors nearly $90 million over the two filings. Some, including Klaussner, Douglas, Universal and Palliser, were stung both times.
The Top 100 retailer, once the largest U.S. furniture store chain with more than $1 billion in sales in 1994 and again in 1995, operates stores in greater New York, Los Angeles, northern California, Seattle, Phoenix, Las Vegas and Portland, Ore. Furniture/Today estimated its sales in 2006 at $480 million, down 20% from the year before.
Zigerelli took the helm in January, replacing Chairman Elliott Wahle and CEO Tom Baumlin, who began revitalization efforts upon Prentice’s acquisition of Levitz out of bankruptcy in December 2005. (Great American’s stake in the acquisition was in running the going-out-of-business sales for some 27 Levitz and Seaman’s units.)
Under Baumlin, Levitz began to shake things up, bringing in new merchandising talent and updating store interiors. In an April 2006 interview with Furniture/Today, Baumlin discussed the need for Levitz to regain its focus and said it was boosting its advertising spending while ratcheting back on its no-no-no financing promotions and increasing the stores’ “style quotient.”
In December 2006, Levitz moved its headquarters from Woodbury, N.Y., to lower Manhattan’s historic Woolworth Building at 233 Broadway. Baumlin said the move represented “one more important step” and would “further our efforts to continue to bring a superior level of creative talent to our organization.
“It is somewhat symbolic that we are moving into our new headquarters one year to the date that we began work to energize our company and breathe new life into the Levitz Furniture brand,” he said.
But like Levitz, the 54-story Woolworth building had seen better days. When it was built in 1913 it was the world tallest building, surpassed in 1930 with the opening of the 40 Wall Street building.
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Levitz seeks Chapter 11 protection
Nov 9, 2007
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