Three D Departments Inc., the loss-ridden Costa Mesa retailer of bed, bath and home accessories, filed for reorganization Thursday in U.S. Bankruptcy Court in Santa Ana.
The company said it has been having trouble obtaining credit recently, preventing it from restocking stores. This also has led to lower sales and more losses.
But the retailer, which operates 21 stores in California, Arizona and Connecticut, hasn’t posted an annual profit in seven years.
The company’s chief executive, Donald L. Abrams, said Three D seeks court approval to tap a $10-million line of credit it has arranged with Foothill Capital Corp.
The new financing would permit Three D “to bring fresh new merchandise into the stores for the upcoming fall and holiday season and enable it to meet its financial obligations on a timely basis,” he said.
He also said the company intends to work out its difficulties and emerge eventually from Bankruptcy Court. He wouldn’t comment on whether the company’s 320-employee work force would be cut or if any stores will be closed.
Abrams said the company’s sales for its fiscal year ending Aug. 1 will be about $38 million, down from $44 million for the prior year.
The family-controlled company traces its roots to a dry goods store started by Abrams’ grandfather in Hartford, Conn., after World War II, Abrams said. It expanded into discount retailing in the 1960s, selling bed and bath linens, curtains and drapes through leased departments in stores, such as Zody’s.
It later opened more stores of its own and shifted its headquarters to Orange County in the mid-1980s.
In recent years, the company has struggled to find its financial footing. During the economic recession of the early 1990s, it cut prices but couldn’t stimulate sales. Moreover, it continues to face competition from huge, well-financed rivals, such as Linens & Things and Bed, Bath & Beyond.
Presently, the Abrams family controls more than half of the company’s stock, with Donald Abrams owning a 12.2% stake, father Bernard, 33.3%, and cousin Joe Diamond, 10.4%, according to the company’s recent proxy statement.
The company’s reduced work force in Orange County now totals about 80 people, including 30 at its corporate headquarters, Abrams said. The other employees are assigned to stores in Anaheim, Santa Ana, Mission Viejo and Irvine.
The company closed a Westminster store in April.