LL Flooring, a major American flooring retailer, has filed for Chapter 11 bankruptcy. This move comes as part of a larger trend of retail closures sweeping across the United States.
LL Flooring’s Bankruptcy Filing
On Sunday night, LL Flooring took the significant step of filing for Chapter 11 bankruptcy in Delaware. This type of bankruptcy allows the company to keep operating while it works on restructuring its debts and cutting costs. As part of this process, LL Flooring plans to close 94 of its 442 stores, which are spread across 47 states.
The company’s CEO stated, “We expect the company will survive and will meet all existing orders while it reorganizes.” This is meant to reassure customers who might have pending orders or concerns about the company’s future.
What Led to This?
LL Flooring has faced declining sales over the past year. Why? Families have been cutting back on home remodeling projects, which directly impacts the demand for hardwood flooring – LL Flooring’s specialty.
Tom Sullivan, who founded the company (then called Lumber Liquidators) in 1994, had a unique approach. He started by buying excess wood from companies and reselling it at a discount, operating out of a pickup truck in Massachusetts. Sullivan’s strategy of negotiating directly with mills helped the company offer lower prices than competitors.
Reflecting on the company’s growth in 2014, Sullivan said, “To look back and see how far we’ve come in 20 years is almost like a dream. We’ve gone from a tiny operation to having served more than two million people and, along the way, changed the way hardwood flooring is sold.”
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However, the retail landscape has changed dramatically since then. Sullivan left the company in 2017, and it rebranded as LL Flooring in 2020.
The total of 21 retail bankruptcy filings in 2024 through July 16 is so far higher than in the same period of any year since 2020. pic.twitter.com/WOgS2HO1vZ
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) July 18, 2024
The Broader Retail Apocalypse
LL Flooring’s struggles are part of a larger trend often referred to as the “retail apocalypse.” Many stores are struggling with reduced consumer spending and tighter profit margins. Here are some striking numbers:
- Nearly 2,600 store closures occurred in the first four months of 2024 alone.
- If this trend continues, almost 8,000 stores could close by year’s end.
- Macy’s is closing 150 shops – about a third of its total stores.
- Dollar Tree plans to shut 1,000 locations.
- Rite Aid will close almost 800 stores.
Other notable closures include:
- Walmart closing three underperforming locations
- Best Buy shuttering ten stores in March
- 99 Cents Only closing all 371 of its locations across four states
- Express, a mall staple, filing for bankruptcy and closing 95 outlets
- Rue21, a teen fashion chain, announcing the closure of all 543 US stores
- Badcock Home Furniture & More closing all 380 stores across the South
- Big Lots identifying over 300 stores for closure across multiple states
What’s Next for LL Flooring?
As part of its restructuring efforts, LL Flooring is in talks with several potential buyers. The company’s leadership is working to make the business more attractive for acquisition while also trying to cut costs and reorganize operations.
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For now, LL Flooring continues to operate, and customers with existing orders should expect them to be fulfilled. However, the retail landscape remains challenging, and it’s clear that many companies are having to make tough decisions to survive in today’s market.