Fortunoff bankruptcy filing impacts casual vendors
Casual Living Staff -- Casual Living, February 9, 2009
When longtime home furnishings and jewelry retailer Fortunoff filed for Chapter 11 bankruptcy protection last week in the U.S. Bankruptcy Court for the Southern District of New York, more casual furniture manufacturers were on the list of creditors than was initially reported.
In its filing, parent companies Fortunoff Holdings and Fortunoff Card Co. estimated that there were more than 1,000 unsecured creditors. Assets and liabilities were both estimated in the $100 million to $500 million range.
The company was bought out of bankruptcy in March 2008 by NRDC, which said at the time that it hoped to expand the Fortunoff brand beyond its existing retail bases partly by adding new home goods and jewelry departments in Lord & Taylor department stores, which NRDC also owns, as well as opening new outdoor furniture specialty units.
In its listing of the 30 largest creditors, outdoor furniture supplier Hanamint Corp. of Greensboro, N.C., was largest, with an estimated claim of $1.5 million. Court documents show other home furnishings companies on that creditor list including Agio International, with estimated claim of $875,000; Pride Family Brands with more than $366,000; Erwin & Sons Direct Imports with more than $290,000, and Cast Classics with nearly $250,000.
In the filing, Fortunoff indicated that it plans to seek court approval to conduct an auction for the company’s assets. Founded in 1922, Fortunoff operated 20 stores in New York, New Jersey, Connecticut and Pennsylvania at the time of the filing. Fourteen of those are furniture and patio stores, which sell outdoor furniture and barbecue grills from February to September and indoor furniture in October through January. The company’s four full-line department stores also feature seasonal shops offering outdoor furniture in the summer, switching to Christmas trees and holiday accessories in winter months.
In explaining its decision to seek Chapter 11, the retailer cited a “severe liquidity crisis that began in January 2009” with vendors tightening up on credit. In addition, it also blamed dismal sales in the recent holiday season, increasing weakness in consumer spending on high-end furniture and jewelry, the costs associated with expanding the company’s jewelry business into the Lord & Taylor stores, and reduced borrowing capacity.
For the nine month period from March 3 to Nov. 30, 2008, the company said it had net operating losses of approximately $42.1 million on sales of approximately $260.1 million.
Fortunoff officials said they have “aggressively pursued” an equity investment or a sale of some or all of the company’s assets with potential buyers, investors or partners as well as with liquidators.