WFCN –
A bargain furniture retailer is preparing to reorganize its business following a drop in sales and yearly losses by filing for a painful Chapter 11 bankruptcy.
A Chapter 11 bankruptcy is being considered by the well-known bargain furniture retailer Conn’s HomePlus in order to reorganize its finances.
Home Goods Mart, headquartered in The Woodlands, Texas, has 170 locations in 15 southern states and employs around 4,000 people, according to the company’s website.
Furniture, appliances, and consumer electronics are all available at this store, which also provides next-day delivery and a variety of tailored payment alternatives, such as an in-house credit program.
Bloomberg was informed by sources close to the situation that Conn’s HomePlus has been facing challenges with falling sales and the integration of home goods retailer W.S. Babcock, which it acquired last year.
Retailers are finding it harder to make a profit due to rising borrowing rates, which drives customers away.
Prices can go up and people won’t buy as much if inflation is high.
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Retailers of household furnishings frequently see their businesses wiped out by inflation and high loan rates.
Consumers are discouraged from buying homes due to inflated prices and high mortgage rates. As a result, they forego acquiring new furnishings to furnish their new abode.
Midway through 2021, inflation started to climb and reached a peak of 9.1% in June 2022.
Beginning in March 2022, the Federal Reserve began a series of eleven interest rate hikes aimed at combating inflation that lasted until July 2023.
In November 2023, the average 30-year mortgage rate reached 7.22%, the highest level in 20 years, due to the increasing interest rates.
Bankrate reports that the current rate as of July 2 is 7.07%.
As a result of this inflation, a lot of furniture stores have seen a significant drop in sales.
The goal of bringing in financial advisor Houlihan Lokey and operational support from Berkeley Research Group was to help Conn’s HomePlus (CONN) restructure its debt.
Although talks have not yet reached a final conclusion and plans are subject to change, insiders have indicated that a bankruptcy file might occur within a few weeks.
As its lower-income clientele has struggled with the consequences of inflation, Conn’s has lately had economic difficulties, declaring losses in the last two years, according to The Street.