Leather Factory closing down operations
April 25, 2006-- Furniture Today,
ENCINO, Calif. — The Leather Factory, a one-time Top 100 company, has shut down its remaining stores and is selling off its factory assets, the victim of poor business and Chinese competition.
The vertically integrated company, which filed for Chapter 11 bankruptcy protection in October, said in a court document that it had closed “after considerable and failed efforts to reorganize.”The company said it is attempting to finalize a sale of its retail business with “a very interested buyer,” and asked the court to quickly approve the sale of its assets in its leased Montebello, Calif., factory for a total of $27,952.By the time the Encino-based company filed for bankruptcy — citing rising costs, increased competition and a poor business climate — it had scaled back to a dozen stores.In its bankruptcy petition, Leather Factory said it owed leather hide suppliers and other industry creditors more than $1 million, and had assets of $2.2 million and liabilities of $5.1 million. It had sales in fiscal 2005 of $19 million, according to court papers.The 26-year-old company last appeared on Furniture/Today’s survey of Top 100 U.S. Furniture stores in 1997 with estimated 1996 sales of $33 million and 19 stores in California, metro New York, Las Vegas and Scottsdale, Ariz.Owners Sy Katz and his son, Larry Katz, couldn’t be reached for comment. Juan Diego Casaretto, managing director of hide supplier Friitala-Branaa, said his company enjoyed a long business relationship with the Katz family and Leather Factory. “It was really tough to see them go,” Casaretto said. “On the West Coast, I guess the market changed so quickly. I guess the main reason (for the decline) is everything coming from China already built and at a much lower price made (Leather Factory) not so competitive for the final customer.”Casaretto said he spoke to the owners recently and understood they were looking for investors. “It’s a nice plant and a good business model,” he said. “It should be an attractive investment for someone.”