Is it curtains for South Coast Plaza’s Z Gallerie? Owners hold fire sales amid bankruptcy

Z Gallerie — an art-inspired home decor and furnishing retailer with a storefront in Costa Mesa’s South Coast Plaza — is holding store-closing sales with deep discounts after its parent company filed for bankruptcy earlier this month.

News came Wednesday from representatives of B. Riley Retail Solutions, a retail consultant for DirectBuy Home Improvements, Inc., a member of Indiana-based CSC Generation Holdings that bought the Z Gallerie brand and its assets from its prior debtors during a bankruptcy sale in 2019.

The closing sales, which offer 40% discounts on all in-store merchandise on a no-returns basis, are being held in 21 locations in nine states.

A Z Gallerie home furnishing store in Tampa, Fla., is one of 21 locations hosting store-closing sales in the wake of a bankruptcy announcement.

(Courtesy of B. Riley Retail Solutions)

In addition to the Costa Mesa store, another California location holding a closure sale is in Sherman Oaks, where the brand got its start operating as a poster shop in 1979.

“This is a unique opportunity to buy high-end, quality home décor at deeply discounted prices,” Tim Shilling, executive vice president of B. Riley Retail Solutions, said in a news release Wednesday.

“We encourage shoppers to visit their nearest store before merchandise sells out. This sale will be available for a limited time only.”

South Coast Plaza representatives declined to comment on the bankruptcy proceedings but confirmed the retailer signed its initial lease in 2001 in a storefront now occupied by Williams Sonoma. Z Gallerie relocated in 2014 to the first floor of the center’s Macy Home Store Wing.

In an Oct. 16 declaration filed with the U.S. bankruptcy court in New Jersey, Robert Fetterman, chief financial officer and interim CEO for DirectBuy Home Improvement, Inc., cited adverse macroeconomic trends and “industry specific headwinds” as factors that placed serious constraints on the company’s liquidity.

“Specifically, supply chain and import costs significantly increased in late 2021 and into 2022, severely impacting the brand’s profitability and cash position,” Fetterman declared.

“Interest rates increasing based on inflationary pressures, and mortgage rates increasing to some of the highest rates in approximately a decade or longer, new home purchases and the housing market [have] slowed significantly, which is a major driver of business for the brand.”

Although it is unclear when or whether the storefronts will close altogether, officials have indicated Z Gallerie gift cards may be used until Nov. 15.