Document text
Heilig-Meyers files for bankruptcy Eleven jobs to be lost in Phoenix-area store Wire and staff reports RICHMOND, Va. � Home furnishings retailer Heilig-Meyers Co. filed for Chapter 11 bankruptcy protection Wednesday and said it will close 302 stores, including its South Pacific Highway store near Phoenix. About 4,400 jobs will be cut, including 11 in the Rogue Valley. The closings will leave the Richmond-based chain with 596 stores and about 12,900 employees in 29 states, company spokesman Barry Brockwell said. The bankruptcy petition lists assets of $1.35 billion and liabilities of $868 million. The company reported a net loss of $15 million for the quarter ended May 31. "Continued disappointing operating results coupled with an inability to secure alternate financing sources limit our ability to achieve the necessary strategic and capital improvements to compete in today�s retail marketplace," Heilig-Meyers president and CEO Donald S. Shaffer said Wednesday. Shaffer took over the company last month after William C. DeRusha resigned as chairman and CEO. DeRusha had come under increasing fire as Heilig-Meyers lost money in each of the last three fiscal years. Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. in Richmond, said Shaffer�s predecessors failed to respond to a changing consumer credit marketplace. "We used to call Heilig-Meyers a bank disguised as a furniture retailer," Gassman said. The company bolstered its revenue by financing furniture purchases for customers who had few other credit options. But then credit card companies began issuing cards to those customers, who were able to buy furniture elsewhere because they did not have to rely on Heilig-Meyers� in-house financing, Gassman said. Heilig-Meyers said Wednesday that it will quit offering in-store credit. The company will contract with a third party to handle credit transactions � a move Gassman said was long overdue. Gassman said Heilig-Meyers� problems peaked when the company decided to delay making $18 million in interest payments that were due this month. Many furniture suppliers either stopped shipping to the company or required cash up front, and Heilig-Meyers executives "found themselves quickly spiraling into a financial abyss," Gassman said. Shaffer said he believes manufacturers will work with the company during its reorganization. Heilig-Meyers also announced that it has received a commitment from a group of lenders for $215 million to help the company through its reorganization. The funding is subject to Bankruptcy Court approval. Shaffer said bankruptcy protection will enable the company to reduce overhead and focus on operations that have been most profitable, including its 57-store RoomStore division. None of those stores, which are in major markets, will be closed. In addition to closing unprofitable stores, Heilig-Meyers will shut down distribution centers in Hesperia, Calif., and Thomasville, Ga., Brockwell said. The Virginia stores to be closed are in Emporia, Radford, Martinsville, Christiansburg and Collinsville. The company will seek Bankruptcy Court approval to conduct inventory liquidation sales at the stores that are closing. Brockwell declined to say whether the company has a potential buyer for those stores. Heilig-Meyers, founded in 1913 in Goldsboro, N.C., grew to a chain of 1,249 stores at its high point in 1998. The company�s stock traded as high as $39 in late 1993. It closed Tuesday at 50 cents, down 6 cents. Trading was halted Wednesday because of the bankruptcy filing. The South Pacific Highway store is one of two closing in Oregon; the other is in Eugene. The chain has nine stores in Washington state, four in Idaho, 81 in California. Obituaries | Sports | Business | Classifieds | Tempo | Prime Times | So Oregon Sites | Outdoor Journal | Subscribe | Contact | Movies | Advertise | Real Estate Showcase | Archive | Editorials | Letters to the editor | Religion | Wake-up Call | NIE | Cyber Chef | Job Network | So Oregon Weather | WSJ Northwest | Forums | AP Wire | AP Money | F.A.Q. | Awards Ottaway Newspapers, Inc. The Community Newspaper Subsidiary of Dow Jones & Co, Inc Copyright �The Mail Tribune 2000, Medford, Oregon USA