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Major U.S. flooring supplier files for BANKRUPTCY and plans to close 94 stores nationwide
Major U.S. flooring supplier files for BANKRUPTCY and plans to close 94 stores nationwide
A major flooring materials supplier in the U.S. has filed for bankruptcy and plans to close 94 of its locations across the country.
The Daily Mail reported that LL Flooring filed for Chapter 11 bankruptcy protection in Delaware on Aug. 11. A Chapter 11 filing allows companies to continue running their business while they work out how to cut costs and renegotiate with firms they owe money to.
Under the company's reorganization plan, LL Flooring will close 94 of its 442 stores spread out across 47 states. The closures aim to cut costs and make the company attractive to potential buyers. LL Flooring's problems come amid a widespread "retail apocalypse," which sees stores struggle with consumer pullback and increasingly tight margins.
Adding salt to the company's wound is the fact that families have cut back on remodeling their homes over the past year. One customer posted on Reddit: "People are mortgaged to the hilt with properties that need work. [But] they cannot afford the upgrades right now."
The 30-year-old LL Flooring isn't alone in its predicament, however. Discount homeware chain Big Lots is also closing down 315 stores across multiple states as its financial situations worsen. The company has marked locations across states such as Connecticut, Massachusetts, Michigan, New Hampshire and Vermont for closure.
According to the Mail, Tom Sullivan established LL Flooring's predecessor Lumber Liquidators in 1994. The company first did business on the back of a pickup truck in Stoughton, Massachusetts by buying excess wood from companies and reselling it at a discount.
Shortly after, Sullivan began negotiating directly with lumber mills. This move sought to cut out wholesalers acting as middlemen and offer lower prices to consumer, undercutting rivals in the process. In 2020, Lumber Liquidators was renamed to LL Flooring.
Department store chain Macy's also feeling the pinch
Store closing has seemed to hit several companies hard, including department store chain Macy's. It was previously reported that the firm is closing 150 "underperfoming" stores, more than a third of its locations. (Related: A "retail apocalypse" is gaining momentum all over America. Is your favorite chain closing stores?)
The decision followed declining sales underscored by a loss during the fourth quarter (Q4) of last year. Given this, Macy's said it would close 50 locations across the U.S. by the end of 2024 – with the 166-year-old firm adding that there will be just 350 Macy's stores by 2026.
Company sales fell to $8.12 billion in Q4, down nearly two percent from 2022. Digital sales saw a four percent decrease, while same-store sales were down by 5.4 percent. In light of these numbers, Macy's announced that it would focus on luxury stores Bloomingdale's and Bluemercury – opening smaller versions of these locations in a bid to boost sales.
"The plans are about correcting what has gone wrong at Macy's, and the biggest things that have gone wrong at Macy's are the quality of the stores and the product assortment," Neil Saunders, an analyst at GlobalData Retail, told the Mail. "And so over the years customers have deserted it, sales have tumbled and store productivity has gone down. All the metrics have gone in the wrong direction."
"We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value," Macy's CEO Tony Spring said in a statement. Spring, formerly the CEO of Bloomingdale's, succeeded former CEO Jeff Gennette in February.
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Watch this video discussing how the substantial amount of physical store closures proves the economy is in bad shape.
This video is from the Economic Edge channel on Brighteon.com.
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