Flooring America closing 5 LV stores, warehouse

Friday, June 16, 2000 | 11:16 a.m.

SUN STAFF AND WIRE REPORTS

Flooring America Inc. of Kennesaw, Ga., which filed for Chapter 11 Bankruptcy protection from creditors Thursday, said it will close all five of its Las Vegas stores and a Las Vegas warehouse.

The carpet and floor covering retailer, which reported $762.8 million in fiscal year 2000 sales, filed a petition in U.S. Bankruptcy Court in Atlanta. In documents filed with the Securities and Exchange Commission in May, the company listed $342.5 million in assets and $151.2 million in debts.

As part of efforts to cut costs, Flooring America said it would lay off "a significant number" of its headquarters staff of 300 and will lay off some 25 workers in Las Vegas.

"All five stores in Las Vegas will be closed. If there are any left open, they will be franchised. They won't be corporate stores," said Don Bailey, an office manager in Las Vegas. "But we think that's not likely to happen."

"We are going to try to fulfil every customers' order to the best of our ability," he said. "The announcement was a surprise. The request for the companies to shut down came on Wednesday afternoon from the head office."

"We're all striving to have a company that will be lean and mean and profitable (and) we believe we can turn the company around," David Nichols, company chairman and chief executive, said in a statement. "The filing is the right strategic move for us at this point in our rebuilding process."

"Substantial doubt exists with respect to our ability to continue as a going concern due to recurring losses" and debt obligations, Flooring America told the SEC last month. The company reported a $52.5 million operating loss for the fiscal year ending in January.

After learning of the bankruptcy, Shaw Industries Inc., the top maker of tufted broadloom carpet, said in a statement it may reduce some of its $210 million in annual sales to Flooring America.

Flooring America, which sells floor coverings at 1,000 locations including 281 company stores in North America, also faces several class-action lawsuits filed by shareholders who contend some executives may have made false statements to inflate the share price last year.