UPDATE: RoomStore aiming for leaner, more competitive operation
Heath E. Combs -- Furniture Today, December 21, 2011
RICHMOND, Va. — Top 100 retailer The RoomStore hopes that bankruptcy reorganization will help it build better economies in distribution and marketing and make it become a leaner and more competitive operation.
This week the company announced plans to close 24 stores and a distribution center, leaving it with about 37 stores. The company is seeking U.S. Bankruptcy Court approval to sell their inventory and other assets at an auction next month.
Additionally, the retailer is seeking authority to designate up to 15 additional stores for closure by Jan. 31, 2012.
The RoomStore, which filed for Chapter 11 bankruptcy protection on Dec. 12, filed documents seeking to close the stores last week and asked to have bids submitted at auction on Jan. 4.
No stalking horse bidder was named, but the company said it reserved the right to name one before the auction date.
About 300 employees will be affected by the closings, some of whom may move to other locations, said RoomStore CEO Steve Giordano, who rejoined the company in November.
The RoomStore said the underperforming locations were chosen prior to its bankruptcy filing during a review of operations.
The majority of the closings affect stores in Texas, with 15 occurring in the state, including five locations in San Antonio. The El Paso distribution center is attached to the Gateway Boulevard store, which also is targeted for closing, Giordano said.
The closings will leave it with 10 stores in the Dallas-Fort Worth and Waco markets, but that number is not necessarily final, Giordano said.
It will close three locations in both Virginia and Maryland and leaving it with ten stores in each state. It also plans to close one store each in Pennsylvania and Florida.
Earlier this year, the company began closing full-line stores in Houston and Baltimore and clearance centers in Norfolk, Va., and Fayetteville, N.C.
The retailer also recently left the Birmingham, Ala., market, where it operated a store and warehouse. The moves will leave the retailer with no locations in Alabama, having closed one earlier this year and the Dalton location through bankruptcy.
The company closed a distribution center in Houston earlier this year, and Giordano said the Dallas distribution center will be a different size.
He said the company will have one main distribution center in Rocky Mount, N.C., and a cross-docking facility in Jessup, Md. The Dallas distribution center will manage inventory coming from Rocky Mount.
Prior to the filing the company had 64 stores and five warehouses in eight states, bankruptcy court documents said.
When the company filed for bankruptcy, it listed assets of $56 million and debts of about $52.5 million, including 13 unsecured furniture industry creditors owed $3.8 million.
The retailer said declining sales and depleted cash due to repaying much of a revolving loan this summer, led to the filing.
"When you are out visiting the stores like I am and you see the desire on these people to make the company stronger it does give you strength even though it's a tough job. It gives you a lot of faith in the future," Giordano said.
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