RoomStore plans to close 24 units
Heath E Combs -- Furniture Today, January 2, 2012
RICHMOND, Va. - Officials with Top 100 retailer The RoomStore say they hope the company's bankruptcy reorganization will leave it leaner and more competitive as it works to be more efficient in distribution and marketing.
The company said it plans to close 24 underperforming locations and a distribution center, leaving it with about 37 stores. It is seeking U.S. Bankruptcy Court approval to sell their inventory and other assets at an auction this week.
The RoomStore, which filed for Chapter 11 bankruptcy protection on Dec. 12, has filed documents with the court asking to have bids submitted to liquidate the stores' inventory 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.
In addition, the retailer is seeking authority to designate up to 15 additional stores for closure by Jan. 31. That would mean that ultimately, the number of remaining stores could be less than 37.
About 300 employees will be affected by the initial 24 store closings, some of whom may move to other locations, said RoomStore CEO Steve Giordano, who rejoined the company in November.
Fifteen of the stores to be closed are in Texas, including five in San Antonio. An El Paso distribution center, attached to a store there, also is targeted for closing, Giordano said.
After the initial round of closings, the RoomStore will be left with 10 Texas stores in the Dallas-Fort Worth and Waco markets, he said.
In bankruptcy court documents, Florida-based Top 100 retailer Rooms To Go said it had submitted a liquidation bid for RoomStore locations in markets where Rooms To Go has stores, mostly in Texas, in a joint venture with Great American Furniture Services. RTG said RoomStore had not responded to its communications.
RoomStore also said it will close three locations in Virginia and three in Maryland, leaving it with 10 stores in each state. It also plans to close one store each in Pennsylvania and Florida.
The retailer will have no remaining stores in Alabama after closing its Dalton location.
The RoomStore closed a distribution center in Houston earlier this year, but retains one in Dallas. Giordano 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 RoomStore stores and five warehouses in eight states, bankruptcy court documents said.
In the filing, RoomStore listed assets of $56 million and debts of about $52.5 million. The 25 largest unsecured creditors include 13 in the furniture industry, owed a total of $3.8 million.
The company said it had to enter bankruptcy proceedings because its cash was depleted after it repaid much of a revolving loan this summer, and because of declining sales.
Julius M. Feinblum Real Estate has been appointed to market 22 RoomStore leases in Texas, Maryland, Virginia, Pennsylvania and Florida. The properties range in size from 22,000 to 140,000 square feet.
The RoomStore also owns a majority stake in 83-store Mattress Discounters, with stores in Delaware, Virginia, Maryland and Washington, D.C. Those stores are not included in the Chapter 11 proceedings.
Giordano said he's optimistic that the company will emerge from bankruptcy as a better organization.
"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," he said. "It gives you a lot of faith in the future."
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