Va.-based RoomStore closing four stores, distribution center
Clint Engel -- Furniture Today, October 26, 2011
RICHMOND, Va. — Richmond-based The RoomStore is in the process of closing two full-line stores, two clearance centers and a distribution center, which it says is part of continuing efforts to cut expenses in a weak sales environment.
Curtis Kimbrell, president and CEO of the Top 100 company, interviewed at the High Point Market, said the moves will lead to the elimination of about 150 positions. This is on top of roughly 300 people who have been let go through attrition, closings and other moves over the past 15 months.
RoomStore is liquidating a 50,000-square-foot store in Houston and an approximately 30,000-square-foot showroom in Baltimore. It has hired Hilco Merchant Resources to run the two sales.
The retailer also is closing a clearance center in Norfolk, Va., and another in Fayetteville, N.C. All four store closing sales are under way and should be completed by the end of the year, Kimbrell said.
In Houston, where the retailer will continue operating five stores, RoomStore also will close its 300,000-square foot distribution center by the end of next month, servicing the market from its 370,000-square-foot Dallas distribution center instead.
The company also just exited the Birmingham, Ala., market, where it had operated a store and warehouse with leases expiring.
Kimbrell said the latest closings are similar in that leases were expiring. In some cases, the stores performed well but the renewal terms were too expensive, he said. All the moves aim to "bring our expenses down, and since we're not growing the company now, we're shrinking it down," he added.
"We're doing the expense cuts necessary to adjust to the lower sales volumes," Kimbrell said.
He noted that the company already has said it is considering disposing of certain assets. When asked about RoomStore's 83-store Mattress Discounters chain, Kimbrell confirmed that the bedding specialist has seen a lot of interest.
RoomStore owns 65% of the bedding chain. The remaining stake is held by Ray Bojanowski, who had been a Mattress Discounters executive under previous ownership and now runs the chain for RoomStore.
Kimbrell said that if a Mattress Discounters offer was right for both RoomStore and its partner "and everything came together, we'd have to look at it." But he wouldn't say how close the chain may be to that kind of offer or who was interested.
He said the company sees the disposal of some assets as a sort of insurance policy. It would rather not sell in a depressed market, "but we'll do whatever it takes to survive."
RoomStore's fiscal first-quarter sales for the period ended May 31 were down 14.3% from a year ago to $67.4 million and it reported a net loss of $4.6 million for the period. It ended the quarter with 66 RoomStores and 83 Mattress Discounters stores.
The company has since estimated that it will report a net loss of $3.4 million for the second quarter ended Aug. 31, and a $3.1 million operating loss on net sales of $70.6 million. That compares with a net loss of $65,000, and an operating gain of $111,000, on net sales of $91.9 million for the same period a year ago.
When the recent closings are complete, RoomStore will have about 60 stores, Kimbrell said.
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