An unexpected bankruptcy is currently in the works at a home improvement company as a result of a precipitous decline in sales and a subsequent exodus of customers.
According to Bloomberg’s sources, LL Flooring is thinking about filing for Chapter 11 bankruptcy so that it can reorganize and restructure its operations.
Many economic issues, including price inflation, rising mortgage rates, and a lack of demand/loss of sales, have been plaguing the home renovation industries.
From a record low of 2.65% in January 2021 to a peak of 7.22% in November 2023, the 30-year fixed-rate mortgage has been a constant threat to the housing market.
On July 3, it was 7.02%.
Many home renovation companies, including LL Flooring, felt the effects of the inflation spike that started in the middle of 2021 and reached a peak of 9.1% in June 2022.
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To combat inflation, the Federal Reserve hiked interest rates for the eleventh time between March 2022 and July 2023.
Customers will be less likely to purchase goods and services from businesses as a result of these price increases and higher interest rates.
Following the disclosure of the home improvement chain’s bankruptcy plans on July 3, the stock price of LL Flooring fell by around 22.5% by close.
There has been no final decision on whether or not to file for bankruptcy, and the company’s intentions may alter, according to sources.
There are more than 400 LL Flooring stores in 47 states, according to The Street. In April 2024, LL Flooring was named the best hardwood flooring shop in the United States by U.S. News and World Report.
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