Conn’s, a furniture retailer, has filed for bankruptcy and is closing its stores nationwide due to a slowdown in recent years that has negatively impacted sales and liquidity. The Chapter 11 bankruptcy was filed in July in the U.S. Bankruptcy Court for the Southern District of Texas. The company, which operates 553 retail stores across the country, has already begun running store closing sales and has requested permission from the court to continue with these sales.
According to CEO Norman J. Miller, Conn’s growth has faced “significant headwinds” in recent years, including shifts in consumer behavior, interest rate pressures, inflation, and increased costs associated with a merger in 2023-24. These challenges have strained the company’s sales and liquidity position. The company’s key debtors have also reduced the debt limit available to Conn’s, forcing the company to take out loans at higher costs. Despite seeking alternative financing arrangements, none have been successful.
Given the macroeconomic headwinds and the poor merger and acquisition environment in the consumer retail sector, Conn’s made the decision to file for Chapter 11 bankruptcy. The company has between 25,001 and 50,000 creditors and assets and liabilities ranging from $1 billion to $10 billion.
As part of the bankruptcy proceedings, Conn’s plans to close down 71 stores across 13 states, with the highest number of closures in Florida. The company currently operates in 15 states and employs approximately 4,000 individuals.
The company’s shares have experienced a significant decline, with a decrease in value of over 92 percent in the past year. On July 24 alone, shares fell by more than 30 percent. In late July, Conn’s received a delinquency notification from the NASDAQ exchange for failing to file a quarterly report. The company has until August 19 to rectify the issues.
Despite the challenges, CEO Norman J. Miller expressed optimism for Conn’s future. He highlighted the company’s premium shopping experience, best-in-class payment offerings, leading e-commerce capabilities, and unique dealer network as factors that will contribute to accelerating revenue and earnings growth.
Conn’s is not the only big brand to file for bankruptcy in 2024. Other companies with over $1 billion in liabilities, such as IT firm Dynata, Red Lobster, Invitae Corp., and Enviva, have also faced financial difficulties.
The increase in bankruptcy filings reflects the growing economic strain on businesses and households. In the first half of 2024, there were 3,016 commercial Chapter 11 bankruptcies filed, a 34 percent increase from the previous year, according to the American Bankruptcy Institute (ABI).
Businesses have been particularly affected by high inflation and interest rates. The 12-month inflation rate has been above 3 percent since June of the previous year, and some analysts believe it may be even higher. Meanwhile, the Federal Reserve has kept interest rates within a range of 5.25 percent to 5.50 percent since July of the previous year. This combination of higher expenses has put pressure on businesses like Conn’s.
