HomePlace calls it quits after failure to get cash
By Staff -- Home Textiles Today, 5/7/2001 9:08:00 AM
MYRTLE BEACH, SC — After entering Chapter 11 for the second time almost six months ago, HomePlace of America stumbled to a halt last week as it announced the immediate liquidation of its remaining 62 stores and one distribution center last week.
At the time of its voluntary petition for reorganization in January, the company said, it had hoped to emerge from bankruptcy by getting additional credit terms from suppliers and banks.
"We have done everything possible to avoid this painful outcome, but it just cannot be avoided," said Greg Johnson, president and ceo, who only last year received a 2000 Retailer of the Year award as Merchant of the Year.
The nationwide specialty retailer — which ranked number 19 on last year's Home Textile Today's Top 50 home textiles retailers list, with home textiles making up 35 percent, or $201.9 million, of its total retail sales for 1999 — closed 38 stores in January and another 22 stores two weeks ago, which left the company with 62 stores.
It is the third retailer on HTT's Top 50 list to shutter its doors in the past six months — Montgomery Wards, formerly number 14, and Bradlees, formerly number 20, were the other two.
In a press release, the company indicated it felt that it could have survived and prospered had it been able to obtain the necessary liquidity. Johnson also indicated that several key vendors had been reluctant to advance credit, making it difficult to supply adequate merchandise levels to meet customer demand.
"Our light inventory levels have been a major deterrent to our gaining sales momentum, and with our light stock levels we simply could not reverse the negative sales trends in our stores," Johnson said.
"While many of our key vendors stepped to the plate and showed their support with more normalized credit terms, we did not achieve the necessary liquidity," he said.
In addition to previously closing stores and a distribution center, the retailer also cut 83 administrative and field supervisory positions to reduce operating losses, but they were not enough to provide enough capital, the company said. "The weak U.S. economy has also worked against us in this process," said Johnson.
Previously, HomePlace had approached several companies about a potential sale or liquidation.
The company planned to wind down its corporate staff here last Friday, affecting 120 workers. A skeleton crew would remain to coordinate the sale of the company's assets, a process that should be completed in less than two weeks.
The closings will affect about 3,000 store workers, but Johnson added: "We are very optimistic that other retailers will pick up our former locations and re-open them as other types of stores, which would help to provide our former store associates with new opportunities of employment."
HomePlace of America was founded in June 1999, as the result of a merger between Waccamaw Corp. and HomePlace Stores Inc. At one time the company operated 122 stores in 27 states and had an operating revenue of $650 million.
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