American Home's four Tucson-area furniture stores will close this weekend and start liquidating their inventory in mid-November, the company announced Tuesday.
Citing the sagging economy, the company filed for Chapter 11 bankruptcy protection in Los Angeles Sunday but said it wants to preserve three of its 11 stores.
"Under this newly proposed structure, we would be able to preserve our 70-plus-year heritage and continue to serve customers in the New Mexico market," Ted Leveque, chief operating officer of American Home, said in the statement.
The Albuquerque-based furniture company was founded in 1936 and has five stores in New Mexico and six in Arizona. Its remaining stores will be in Albuquerque, Santa Fe and Farmington, N.M., if the plan is approved.
American Home has four local stores: 4690 N. Oracle Road, 9559 E. Golf Links Road, 2020 W. Prince Street and at 18705 S. I-19 Frontage Road in Sahuarita. Stores in Mesa and Prescott also will close.
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In September the company announced it would phase out its distribution center at West Prince Road and Interstate 10.
American Home Furnishings, now called American Home, bought the vacant Tucson Galleria, just north of Tucson Mall on North Oracle Road in 1992 and opened its store there the following year.
The company has 674 employees, according to court filings. There are more than 100 employees in the Tucson area, Leveque said in an interview.
The store's parent company, AFC Acquisition Corp., said in bankruptcy court filings that it will close the Arizona stores on Nov. 9 and begin liquidation sales Nov. 15.
American Home was ranked 61st on the most recent top 100 U.S. furniture stores published in May by Furniture/Today. The ranking was based on furniture, bedding and accessories revenues of $116 million for the fiscal year ended Jan. 26.
In court filings, the company listed assets of between $10 million and $50 million and debts between $1 million and $10 million.
Among the debt is $4.9 million to Wells Fargo Retail Finance, LLC and $18.6 million to Hancock Park Capital II, L.P.
A decision by Wells Fargo Retail Finance precipitated the bankruptcy filing, American Home said in its filings. In September, Wells Fargo cut off a revolving credit facility, which led to a liquidity crisis.
But even before that, the weak economy was hurting the company, Leveque said.
"Two factors have been impacting us the greatest: The housing crisis and the credit crisis," he said.
"Those two have combined to affect a lot of businesses in our industry."