Popular retail chain closing stores in Chapter 11 bankruptcy

Economic challenges that severely impact the residential real estate market also tend to have negative effects on the furniture industry.

When people buy a home, they often will soon buy new furniture to go along with their new abode. But when the real estate market has a downturn or a devastating collapse like during the 2008 Great Recession, the furniture retail industry feels the economic distress as well.

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Furniture stores disappear in hard economic times

Levitz Furniture, a once iconic national retailer founded in 1910, fell short of making it a century in the business when it filed for bankruptcy in 2007, liquidated and closed down all its stores in 2008 during the Great Recession.

The Great Recession claimed another furniture retailer as regional chain Wickes Furniture, which had 43 stores in the West and Midwest at its peak, filed for bankruptcy in 2008 and liquidated its assets when it could not find a buyer for its business.

The Covid-19 pandemic in 2020 may have been the last straw for Michigan-based regional furniture store Art Van Furniture, which filed for Chapter 11 in March 2020 just as the pandemic was beginning and liquidated and closed its 190 stores.

Furniture retailers' business over the past two years have felt the impact of rising home mortgage rates that rose from about 3% in August 2021 to almost 8% in November 2023, according Bankrate data. More homeowners are reportedly holding on to their lower mortgage rates instead of selling in a higher interest rate environment. Consumers have also seen credit card and other interest rates rise after the Federal Reserve began raising interest rates in March 2022.

High-end furniture maker and retailer Mitchell Gold + Bob Williams, which operated 27 stores in 14 states and several Canadian provinces, abruptly closed all its stores on the weekend of Aug. 26-27, 2023, when it was unable to obtain adequate financing to continue operations. The retailer reopened for business after that weekend but filed for Chapter 11 bankruptcy on Sept. 6, and subsequently filed for Chapter 7 liquidation.

The parent company of upscale furniture and home decor retailer Z Gallerie, which operated 21 stores in nine states and has an e-commerce platform, on Oct. 16 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of New Jersey. Gardena, Calif.,-based DirectBuy Home Improvement, an affiliate of parent CSC Generation Holdings, filed its petition claiming a lasting impact from the Covid-19 pandemic on the retail industry and supply chain and import cost increases in late 2021 and into 2022 severely impacted its brand profitability and cash position.

The RoomPlace closes stores in Chapter 11 restructuring

Finally, furniture and mattress retailer The RoomPlace, which opened its first store in Chicago in 1912, on Feb. 2 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Illinois to restructure its debts and close several of its stores.

The Lombard, Ill., furniture retail chain with 26 locations plans to close six stores in the Indianapolis area, one in Kenosha, Wis., and one in Peoria, Ill., sources told Furniture Today. The store closings will impact 83 company employees.

The RoomPlace will wind down the eight stores through a contract with Planned Furniture Promotions, which will conduct store closing sales. The retailer's CEO Bruce Berman reportedly said that the company is closing the eight stores to concentrate on strengthening its 18 stores in Chicagoland. He mentioned  declining retail sales across the country and challenges in the furniture industry as having an impact on its decision to file bankruptcy.

Berman's grandfather Sam Berman opened his first store in 1912 and it became Harlem Furniture in 1950 after opening its location on Harlem Avenue in Chicago. The company began expanding, and by 2001, the chain had over 20 stores and changed its name to The RoomPlace.