Levitz closing all Md. stores Company leaving 7 other states, too, laying off 1,000; The road out of bankruptcy; Retailing


Levitz Furniture Inc. will close all five of its Maryland stores as part of a plan to become profitable by shedding outlets and cutting its work force, the Boca Raton, Fla.-based chain said yesterday.

The nation's second-largest home furnishings retailer will pull out of Maryland and seven other states, closing 27 stores and laying off 1,000 workers, to focus on stronger markets on both coasts, the company said. Levitz, which will be left with 63 locations in 13 states, has already closed 39 outlets in two rounds since filing for Chapter 11 bankruptcy protection in September 1997.

Levitz, a leading furniture retailer through the 1960s and 1970s and a forerunner in "big box, category killer" retailing, reported a loss of $52 million for the first half of the fiscal year that ended Sept. 30.

Edward L. Grund, chairman and chief executive officer since November, called the strategy "the next phase in our program to return Levitz to profitability by making our stores more relevant to today's consumers and our systems more efficient."

Stores in Catonsville, Fullerton, Glen Burnie, Rockville and Suitland will close, possibly by late January, a company spokesman said, adding that stores to be closed represent 25 percent of sales but less than 10 percent of profits. Together the stores employ about 180 people.

The company also said it will streamline its warehouse system, consolidating to 17 the 65 it ran before filing for bankruptcy and closing a Baltimore warehouse.

The company, founded by Richard Levitz in 1910 in Lebanon, Pa., pioneered the warehouse concept in the 1960s, selling large quantities of furniture at rock-bottom prices. But the Baby Boom generation has outgrown Levitz, seeking better quality merchandise, said Jerry Epperson, managing director of Mann, Armistead and Epperson, a Richmond, Va.,-based investment banking firm.

"They just stopped being ahead of their time," said J'Amy Owens, president of Seattle-based Retail Group, a consultant firm specializing in furniture retailing. "It's really a function of a fashion business that failed to evolve. And it's also a business that is highly affected by consumer trends and demand."

In recent years, the company has been hurt by the rising popularity of specialty retailers, such as Crate and Barrel and Pottery Barn, offering more stylish furnishings at the lower end of the price spectrum, she said.

Older locations, some built three decades ago, have also hurt business, Epperson said.

Levitz said it will use proceeds from the sale of closed stores and warehouses to reduce debt, refurbish existing stores and open new ones, including 15 in its core markets. None of the new stores is planned for Maryland. Grund indicated that new stores may be patterned after a new Levitz in Phoenix that is arranged by consumer lifestyle rather than category.

"So, instead of looking at 20 dining room sets in one area, a shopper interested in contemporary furniture sees contemporary dining rooms and bedrooms, as well as the accessories that go with them," he said.

The seven other states that Levitz is leaving are Virginia, Florida, Texas, Louisiana, Indiana, Kansas and Missouri. The company's remaining stores will be concentrated in New York and a dozen other states, including Pennsylvania and New Jersey.

Pub Date: 12/22/98

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