RoomStore Chain Files for Bankruptcy, Plans Store Closings

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RoomStore Chain Files for Bankruptcy, Plans Store Closings

12/13/2011
The RoomStore furniture chain has filed for Chapter 11 bankruptcy protection and will close a number of underperforming stores in the coming months, but otherwise plans to continue business as usual. The chain's 64 stores are located in eight states stretching from Pennsylvania to Texas, and RoomStore is also a 65% shareholder in Mattress Discounters Group, which operates 79 bedding stores.

The bankruptcy petition, filed on December 12 in U.S. District Court in Richmond, VA, listed approximately $56 million in assets and $52 million in debts, according to published reports. For the six months that ended August 31, 2011, RoomStore had net sales of $138 million, down from $170.6 million for the same period the previous year. The retailer reported a net loss of $7.7 million in the first half of 2011, compared to a net loss of $2.1 million in 2010's first six months.

RoomStore's decision to voluntarily file for Chapter 11 follows last month's appointment of Stephen Giordano as CEO, who was brought in to execute the reorganization and turnaround of the business, according to a release on the RoomStore website.

"RoomStore is a viable and recognizable brand that is an established leader in the home furnishings industry," said Giordano in a statement. "Our dedication to providing our customers with excellent value in home furnishings will provide a strong foundation as we grow and improve during restructuring."