NEW YORK, NY – DECEMBER 04: A customer shops at ABC Carpet and Home in New York City. (Photo by … [+]
New York’s home goods retailer, ABC Carpet & Home, filed for court protection under Chapter 11 last week. The quaint store at 888 Broadway was a major destination for locals and visitors alike for decades with luxury rugs, home decor, furniture, bedding, dinnerware, and lighting.
In court papers, according to Retail Dive, management blamed COVID-19 related issues including last year’s store closures, supply chain delays, and difficulty in finding buyers or investors to fund a turnaround. The truth is somewhat more stark. Even before the pandemic disrupted everything, the company did not keep up with changing consumer moods and did not keep in step with the times. Management did not have a vision for the future.
While the company has a distinguished history that goes back to 1887, and for a while was able to expand with additional stores, management did not keep in step with the mood of new generations of potential customers – what they wanted to buy and how they wanted to shop. For instance, it was slow to update its website with a fresh look and feel that would attract a loyal audience. A new website was finally launched in February 2021. Its selling floors creaked and were uneven, the elevator operated slowly, and a new restaurant was not comfortable. Food was fair.
Current CEO Aaron Rose described that the carpet business hit $60 million in revenues back in 1988. Since that time, expansions in Florida and London, coupled with an additional Manhattan store across the street, an outlet store in Brooklyn, and warehouses in Long Island City and New Jersey added to the business but stretched management. (Those other stores have since been closed.) Aaron had succeeded Paulette Cole, who ran the business from 2003 to 2019. She was the great-granddaughter of the founder, Austrian immigrant Samuel Weinrib. He started in 1887 by selling rugs off a cart on New York’s Lower East Side. Paulette’s grandfather opened a rug store which moved to a two-story store on Broadway in 1961.
Aaron Rose says the company owes about $3.5 million in back rent. The company has a stalking horse bid and bankruptcy financing agreement from 888 Capital (which is controlled by the financial firm Regal Investments with a minority interest held by Pauline). The chapter 11 filing is in the hope that there will be other investors interested in continuing the business. If other qualified bidders emerge, Rose hopes to hold an auction by October 22 and close on a sale of the company no later than October 31, 2021. The stalking horse bid from 888 Capital includes a credit bid worth about $15 million as well as $300,000 in cash for assumed liabilities. According to a New York Post report, there are several other buyers who have interest in the company. They include the private equity firm Windsong Global, the brand licensing firm Hilco Brands, and Burch Creative Capital, lead by Chris Burch, co-founder of Tory Burch.
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The retailer has more than 30 unsecured creditors with trade claims, plus bank debt of more than $15.5 million owed to wealth management fund Northern Trust
POST SCRIPT. In the post-pandemic period, home furnishings have been a priority for many New Yorkers. It is a pity that ABC Carpet & Home did not evolve its brand and build a good relationship with the younger generations. A strong management team is needed to attract investors and customers. The store’s location just north of Union Square is attractive. It is near Patagonia and Fishes Eddy, two stores that appeal to the younger customers ABC needs. The restaurant could be improved and become a socially attractive luncheon place in the area as well.
Yes, the floors need some care, the elevator needs attention, but all of this is minor to the need to improve the fashion savvy of the associates and the friendliness of the enterprise.
