Boarding Up : National Lumber to Close Fullerton and 5 Other Stores, Lay Off 165
In another cost-reduction move, National Lumber & Supply Inc. said Thursday that it will close six of its 21 home-building centers and lay off about 165 employees working at those outlets.
“The move is designed to stem financial losses, reduce operating costs and bolster inventory levels of remaining stores,” the company said in a prepared statement.
The announcement comes three days after the company said it was considering closing some of its stores. The company, which is seeking new investment capital, earlier said it was considering filing for Chapter 11 bankruptcy and the sale of some or all of its assets.
The six stores, including one in Fullerton, are slated to be shuttered Monday after close-out sales to try to sell off as much merchandise as possible. The remaining goods will be transferred to other stores in the chain, the company said in a statement.
The manager at the Fullerton store said everything is being sold for 25% off. He declined further comment. The other stores being closed are in La Mirada, Riverside, Moreno Valley, Oceanside and Covina.
About two-thirds of the approximately 250 employees working at the stores will be laid off. The remainder will be reassigned to more profitable stores in the Fountain Valley-based chain, company officials said. The firm employs about 1,200 workers.
National Lumber, which was founded in 1942 by Sol Jaffee, has been struggling with losses for several years as it faced greater competition from home-building super-store chains, such as HomeClub and Home Depot.
The company said earlier this week that it expects to report a reduction in net worth and a “significant loss” for the fourth quarter and fiscal year ended Jan. 31. National Lumber lost $4.4 million in the nine months that ended Oct. 31 on revenues of $108 million.
Its financial problems have made some of its suppliers skittish, and the company has been unable to stock its stores sufficiently as a result. The store consolidation should help by moving some merchandise to other stores.
On Monday, the company met with about 200 suppliers who informally agreed to keep shipping goods on a collect-on-delivery basis. The suppliers, who also formed a creditors committee, also agreed not to press claims for repayment of past debts until April 6.
Company officials told the suppliers then that a few marginal stores would be closed. The closings are designed to give the entire chain a quick infusion of cash and help restock the remaining stores with much-needed merchandise.
In its statement Thursday, National Lumber reiterated that it was continuing to study steps to restructure, including seeking new capital and greater credit. The company has been negotiating for several weeks with its major secured creditor, Fidelcor Business Credit Corp., National Lumber has been seeking to restructure its $13-million revolving credit account with Fidelcor under a two-year agreement.
The company reiterated that it is considering a Chapter 11 filing under the Federal Bankruptcy Code. Such a petition would allow the company to reorganize while protecting it from its creditors.
The company also said it is continuing to refocus its marketing strategy. It is considering subleasing space in stores to other enterprises and trying to implement new marketing strategies in its stores, such as creating centers for sales of French-style doors and windows.
AT A GLANCE
National Lumber, in an attempt to stem mounting losses, plans to close six Southland stores and lay off 165 employees. STORES CLOSING:
Riverside
Moreno Valley
Fullerton
Oceanside
La Mirada
Covina
PERFORMANCE: Statement for National Lumber & Supply Inc. as of Oct. 31, 1989, most recent available. Dollar amounts in millions.
First Nine Third Quarter Months 1989 1988 1989 1988 Revenues $34.0 $37.2 108.1 117.0 Net loss ($2.4) (1.7) (4.4) (2.9) Loss per (.42) (.30) (.78) (.47) share
Source: National Lumber
