Las Vegas Sun

March 28, 2024

Levitz Furniture files for bankruptcy

BOCA RATON, Fla. -- Levitz Furniture Corp., hobbled by debt, filed for protection from its creditors under federal bankruptcy laws today and said it would close stores in nine cities.

While the Boca Raton, Fla.-based chain's Reno store will be among those closed, the Las Vegas outlet at 91 S. Martin Luther King Blvd. has been spared.

Others to close are in Houston; Atlanta; Cincinnati; Jacksonville, Fort Myers and East Fort Lauderdale, Fla.; Salt Lake City; and Potomac, Va. The company did not say how many jobs would be lost.

Corporate officials did not return phone calls inquiring about other details on how the bankruptcy filing would affect local operations.

Levitz, one of the nation's biggest home furnishing retailers, has experienced declining sales and profitability over the past several years.

The Chapter 11 filing in bankruptcy court in Wilmington, Del., should enable it to continue operations while it develops a plan for financial reorganization.

The company said it has lined up a $260 million interim loan from B.T. Commercial to fuel its reorganization and return to profitability.

An analyst said Levitz has been hurt by increased competition and the perception among consumers that its furniture is outdated, chintzy and sold in a warehouse format that is unappealing. Levitz had losses in four of the past five years.

"Shoppers aren't going to Levitz because you don't want the Lazy-Boy with plaid upholstery," said Peter Chapman, president of Bankruptcy Creditor's Service Inc. "They actually probably have what you want, but shoppers don't think they do."

Levitz's parent company listed $116 million in liabilities and $13 million in assets in its Chapter 11 petition.

"Operating under Chapter 11 will enable the company to continue the turnaround and repositioning efforts begun last year," Chairman and Chief Executive Michael Bozic said in a statement. It also lets Levitz "restructure the heavy debt load which has been consuming our cash flow," he said.

As of May 31, it had a chain of 68 warehouse showrooms and 61 satellite stores located in major metropolitan areas in 26 states. Levitz pioneered the warehouse showroom concept by opening the first one in 1963 in Allentown, Pa.

Today, Levitz stores serve customers in 22 of the largest 25 metropolitan statistical areas.

In the fiscal year ending March 31, Levitz generated revenues of $966.9 million.

Moody's and Standard & Poor's lowered their ratings for the company in October 1995, just two days before Montgomery Ward Holding Corp. said that it was calling off a proposed deal to acquire 19.6 percent of Levitz for $65 million.

Last month, Montgomery Ward itself sought bankruptcy court approval to close 44 appliance and electronics stores.

Levitz said earlier that sales for the first quarter ended in June fell 7.4 percent.

The company also said sales in stores open at least a year fell 6.4 percent and its cash from operations dropped by almost $33 million over the past two years.

In its court papers, officials said the company had $8.43 million in unsecured debt, all of it owed to First National Bank Association in St. Paul, Minn.

THE SUN'S Richard N. Velotta contributed to this report.

archive