Layoffs, closings and bankruptcies 2022. Latest to be hit in furniture industry
HIGH POINT — The sudden decline in consumer demand this year has caught furniture retailers and manufacturers off guard, resulting in exploding inventory levels, declining orders and supply chain chaos. The dramatic shift has put many companies in a challenging financial position resulting in a rising tide of 2022 layoffs, plant and store closures and even Chapter 11 bankruptcy filings.
These issues have been exacerbated by a soft housing market, rising interest rates and staggering shifts in the rate of inflation, for everything from fuel to employees. With a bear market already here, others are wondering how to define a recession and if one actually could benefit the industry.
Here’s a look at some of the companies that have been affected by the recent slowdown, including those who have had to shutter their business:
United Furniture Inds./Lane
In mid-June, Lane Home Furnishings announced it was replacing CEO Mike Watson with former Standard Furniture CEO Todd Evans. Evans had been serving in a newly created role of president, case goods and global sourcing at Lane since March 2021. At the same time Jay Quimby, executive vice president of sales and a 23-year company veteran, also departed.
“Our main goals coming out of the pandemic are to focus on product improvements and value and overall reliability,” Evans said at the time of his appointment.
Shortly thereafter, the company named Ruff Thomas and Keith News to sales leadership roles in a restructured sales team. Thomas was president of sales for Lane’s domestic division, and News was named president of sales for Lane’s import division. Both were veteran furniture people. News worked previously with Evans at Standard Furniture, and Thomas previously managed sales at another Mississippi upholstery maker, American Furniture (since renamed Peak Living).
“A key characteristic that has enabled them to be successful through the years is their ability to listen actively and attentively,” said Evans, in announcing the duo’s appointment. “Because they do, they can quickly and appropriately support their sales teams. Because they do, they can fully cooperate with our channel partners.”
Then on June 30 the company announced it would be laying off 300 people, closing its metal stamping facility in High Point. In addition, the company said it would transition a manufacturing factory in Amory, Miss., to a warehousing-only facility and transition a Winston-Salem, N.C., operation to an East Coast distribution center.
Prior to the announcement, Lane employed more than 3,000 workers at 18 plants, offices and distribution centers in California, Mississippi and North Carolina in the U.S. and Ho Chi Minh City in Vietnam. After the transition, the company expects to employ just over 2,700 at its 17 operations in the United States.
In the first quarter this year Serta Simmons Bedding filed at least three WARN Act (Worker Adjustment and Retraining Notification) notices announcing plans to close factories in Virginia, Iowa and Kansas.
The most recent filing for the company’s factory in Lenexa, Kan., where Beautyrest products are manufactured, impacts 70 employees. In April the company announced the closing of its Clear Lake, Iowa, facility that employed 86 people. The company also gave the state of Virginia notice April 29 that it would close its factory in Fredericksburg, Va., that employed 128 people.
“We are in the process of optimizing our manufacturing footprint to create operational efficiencies and best leverage our network to meet the needs of our retail partners as well as consumers, while creating a best-in-class employee experience. As part of this, we are expanding our operations in certain areas and consolidating other operations,” the company said.
In mid-April Corsicana named a new CEO, former Leggett & Platt executive Eric Rhea. His unenviable first public task was to close the company’s 165,000-square-foot boxed bed manufacturing facility in Indiana, which had only opened in March. At the time, Rhea described the move as ” flattening our organization and rationalizing our infrastructure” and said it was as a necessary step for the company to get back to its value-based roots as a low-cost mattress provider.
Two months later the company announced it would close its Symbol mattress plant in Richmond, Va., acquired when Corsicana acquired Symbol in April 2021. Rhea described that plant closing, along with the Indiana plant shutdown as “another necessary step in our drive to return as the industry’s leader in value-priced bedding.”
Less than a week later Corsicana, along with 11 affiliated companies, filed for Chapter 11 bankruptcy and began working on an asset purchase with Blue Torch Finance as a stalking horse bidder. According to its filing the company showed $151 million in assets and $260 million in liabilities. The company owed unsecured creditors $45 million with an additional $145 million in funded debt.
Corsicana subsequently obtained up to $58 million in debtor-in-possession financing, which includes up to $18 million in term loans from Blue Torch Finance which is looking to acquire Corsicana, and up to $40 million in revolving loans from Wingspire Capital.
In announcing the financing agreement Rhea indicated the company expected to emerge from the filing re-focused on its core customers and able to operate with greater efficiency.
It started with a call for voluntary layoffs at Pontotoc, Miss.-based Southern Furniture Inds., parent company of motion upholstery maker Southern Motion and upholstery manufacturer Fusion. Citing a slowdown in demand, the company said it would be reducing its workforce and first was looking for voluntary layoffs. That call resulted in approximately 10 workers leaving the company.
Within a week however, the company announced an additional 280 employees would be laid off as the company sought to balance its manufacturing operations with a reduced level of demand.
“This reduction impacted less than 15% of our approximately 1,900 associates across multiple sites throughout North Mississippi. These are always difficult decisions, and it is our hope to rehire these associates in the near future as demand improves,” said company CEO Mark Weber.
Interior designer platform Modsy, one-time emerging design and e-commerce darling, was reported to have shut down in late June, laying off most of its staff, according to industry reports. Founded in 2015, Modsy was one of a handful of new digital concepts that looked to replace traditional business processes with cloud-based alternatives. Modsy Founder and CEO Shanna Tellerman confirmed layoffs in a statement to TechCrunch , but also expressed the intent that the business would continue.
“We have worked hard over the past seven years to build Modsy and never expected we would have to disrupt our business. Our focus has always been, and still is, on our customers. We intend to fulfill customer merchandise orders, and we are working through a process for our design service customers. We ask for your patience as we work through this plan. I hope that for many people, the Modsy story will not be defined by this turn of events, and we are truly sorry. We would like to thank our team, our designers and our customers,” Tellerman’s statement said.
The company did not share details on the number of employees laid off.
In June online interior design sourcing platform Steelyard closed after 24 years in business. According to company founder and CEO Shawn Hughes, the COVID shutdown and supply chain challenges, “compounded the challenges we were facing as an independent organization.
Steelyard announced an agreement with Sandow Design Group has agreed to provide a path forward for Steelyard’s 30,000-strong design community and brands. “They’re interested in taking care of the clientele,” Hughes said. “They have a similar platform on the design side for contract and hospitality, LAUNCH, and this opens up the platform for more residential designers. I’m hopeful our designers and brands will have a happy place to be.”
Furniture retailer NB Liebman announced plans this spring to close the 100-year-old family business. The Pennsylvania-based company opened its first store in 1946 and at its height operated 10 stores from Allentown to downtown Philadelphia and stretching as far as Baltimore, Md., and Cherry Hill, N.J. The company is currently in the midst of going-out-of-business sales.
The closing of the long-running family business is a reflection of changes currently underway in the furniture industry, with smaller retailers increasingly challenged to keep pace with the technological and logistical demands of a changing business.