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Crisis/Opportunity
February 5, 2008

Pretty amazing isn't it?  Economists argue whether we are in a recession or soon to be in one.  I've even heard the "d" word used, which gets trotted out everytime pundits want to scare us.  But, there is no disputing the fact that some furniture and accessory stores have gotten into trouble financially. 



This weekend Wickes followed Levitz into Chapter 11 bankruptcy as did Fortunoff of Long Island.  The disturbing thing is that Fortunoff started in the mid-20s and weathered the depression and all the bad and good times since.



Looking at my blog about Troubled Companies, I have written about Domain Home, started in 1985 by Judy George, gone!  



I have written that "in 2000 Nationwide Mattress and Furniture Warehouse known as Nationwide Warehouse & Storage had 160 stores in the U.S. and Canada. Sun Capital acquired the majority stake in a trimmed down 63-store Nationwide in 2002 in a deal valued at $10.7 million. Six years later, Great American Group’s furniture division will take over operations in about a week and liquidate the Nationwide business.

I have asked is Sears a Troubled Company? and written that Sofa Express and More filed Chapter 11.

Say it!  It's a little scary when you see big companies like Levitz, Wickes, etc. get into trouble. 

Like all events like these, there is the potential for opportunity if we avoid their mistakes.  In the case of Domain Home, the mistake may have been too much debt involved in the LBO.  With greater leverage comes greater risk and a small downturn gets magnified.  In the case of Fortunoff, not only was there increased competition from Bed Bath & Beyond and Wal-Mart, but Fortunoff stopped being unique.  For us at Landfair Furniture, we try to have quality vendors that are different and not carried locally.  But, we have to keep on top of who else is selling our designs to stay unique.

The opportunity, as I see it, is there for the survivors.  Many of our major competitors will be gone.  Who knows how many Sun Capital investments we will hear from next?  We can continue to offer great service, a fun and informative place to shop and a great quality for the price.  We can pay down debt and stay out of debt.  We can pay attention to the little things that eat our cash flow like bookworms.  What is the status of your freight claims?  Are you one of those that has no idea?

UPDATE: Newsday.com has an indepth article entitled The rise and fall of Fortunoff by Keiko Morris. 

Thoughts?  We would love to hear them.  Maybe you will help someone get through this.  Email me at landfair3554@comcast.net.

Posted by Mike Landfair on February 5, 2008 | Comments (0)