Levitz Seeks Bankruptcy Protection

Levitz Furniture, squeezed by competitors and heavy debt, announced Friday that it had filed for Chapter 11 bankruptcy protection and would close stores in seven cities.

The filing in U.S. Bankruptcy Court in Delaware will enable the home furnishing giant to continue operations while it develops a plan for financial reorganization.

It’s an “opportunity to restructure the heavy debt load which has been consuming our cash flow,” said president and chief executive Michael Bozic.

Richard Levitz founded the furniture retailer in 1910 with his first store in Lebanon, Pa. In 1963, Levitz pioneered the warehouse showroom concept with its Allentown, Pa., store.

But Levitz has experienced declining sales and profitability in recent years as new competition flooded the market. Consumers began to favor store layouts that resembled home interiors rather than warehouses of furniture lined up in rows.

“Levitz defied the march of time and the march of consumer taste and competition. The public wanted an appealing presentation,” said Kurt Barnard, president of Barnard’s Retail Marketing Report.

The company, based in Boca Raton, Fla., said it will close stores in Atlanta; Cincinnati; Salt Lake City; Houston; Reno, Nev.; Jacksonville, Fla.; and Fort Myers, Fla. It said it also would close a smaller satellite store in Fort Lauderdale, Fla., and another in Potomac, Va.

Court papers showed that Levitz Furniture Corp. had $1.1 billion of assets and $1.2 billion debt. The parent company, Levitz Furniture Inc., listed assets of $13.2 million and liabilities of $116.4 million.

For its fiscal year ended March 31, Levitz lost $27.59 million, or 93 cents a share, compared with $23.75 million, or 80 cents a share, a year ago. Sales for the year were $967 million, compared with $986 million a year ago.

As of May 31, Levitz had a chain of 68 warehouse showrooms and 61 satellite stores located in major metropolitan areas in 26 states.