Another victim of the slumped housing market, the Richmond, Virginia, publicly held home furnishings seller RoomStore, Inc., (traded under the OTC Bulletin Board ticker symbol ROOM) is in financial trouble and filed for Chapter 11 Reorganization debt relief on December 12.
Founded in Dallas, Texas, in 1992, the original RoomStore chain was purchased by the Heilig-Meyers Company in 1997. In 2000, however, Heilig-Meyers and all of its subsidiaries filed for Chapter 11 relief under the U.S. Bankruptcy Code.
RoomStore, Inc., came out of the Heilig-Meyers’ bankruptcy in 2005 with 63 stores still intact. When the real estate market began to fall off in 2006, RoomStore expanded by taking over six furniture store leases from retailer Rhodes, Inc., during that company’s 2006 bankruptcy. RoomStore then took over Mattress Discounters Corp., acquiring mostly inventory and property leases, during that company’s 2008 Chapter 11 bankruptcy.
Today, RoomStore, Inc., employs 1,194 people and has 63 retail furniture stores in Alabama, Florida, Maryland, North Carolina, Pennsylvania, South Carolina, Texas, and Virginia. RoomStore also has seven distribution centers, none of which are located in Arizona.
In its Chapter 11 petition, RoomStore reported the extent of its annual rental obligations — $23.1 million for its fiscal year ending in February 2011. The company’s online sales were strong at $5.8 million for the same period, but insufficient to offset losses. Here are a few financial details of RoomStore’s circumstances leading up to its Chapter 11 petition for bankruptcy relief:
Net Sales for fiscal year ending February 2009: $318.6 million.
2010 Net Losses: $13.6 million.
Net Sales for fiscal year ending February 2010: $258.6 million.
2010 Net Losses: $7.1 million
Net Sales for fiscal year ending February 2011: $261.8 million.
2009 Net Losses: $13.2 million.
Important Note! Don’t confuse Virginia’s RoomStore, Inc., bankruptcy with our locally owned and operated Arizona RoomStore of Phoenix, “Arizona’s #1 Volume Furniture Store” with eleven locations throughout the Valley, Casa Grande, and Prescott. Arizona RoomStore has a license to use the name “RoomStore,” but is entirely independent from the Virginia Chapter 11 debtor.