Heilig-Meyers Co., the Richmond, Va.-based furniture retailer that is the nation's largest, announced it is closing 302 of its nearly 900 stores and has filed for Chapter 11 bankruptcy protection. The company is also cutting 4,400 jobs as it reduces its store base to 596 locations. The 87-year-old retailer said an expansion plan had fizzled – including its purchase in 1996 of the Rhodes furniture chain, which it sold in 1999 – and it was crippled by credit problems. It had depended for profits largely on the loans it made to customers, but was getting squeezed by increasing competition of subprime lenders, which led to a lowering of credit standards and an increase in loan defaults. (There was one estimate that one of every nine Americans who declared bankruptcy in 1997 listed Heilig-Meyers among its creditors.)
The store closings will occur largely in the Southeast. It is also closing all 81 California stores and getting out of the state. , though, that it won't close any of its 57 RoomStore locations, described as successful ventures.