ABC Carpet & Home may be the next popular brand to fall into the grips of bankruptcy amid a failure to adapt to changing consumer habits, according to various reports.
Bloomberg said ABC, a New York City institution selling rugs north of $10,000, sectional furniture nearing $7,000 and duvets worth $350, among other luxury items in furniture, dining, bedding, home décor, jewelry and beauty, has been seeking new financing or a buyer for over a year since its planned private equity sale to MHR Fund Management went up in flames.
An investor group with experience in home and carpet retailing that is a current lender to ABC could take over the company through a bankruptcy filing or an out-of-court restructuring, the report said.
The century-old retailer is working with advisers from investment bank B. Riley Financial Inc. and law firm Greenberg Traurig to explore additional strategic options to keep the business afloat, the report said.
The New York Post first reported that the company was weighing a bankruptcy filing.
“We are actively engaged in an advanced process with strategic investors that will allow us to continue our legacy of providing our customers with a unique home furnishing shopping experience,” a representative for ABC Carpet and Home told Sourcing Journal in a statement attributed to CEO Aaron Rose.
The Post reported that the retailer’s fourth-generation owner and creative director Paulette Cole has personally poured millions of dollars into the business to keep it afloat during the Covid-19 pandemic. Despite the cash infusions, the store’s inventory has been slashed, the report said.
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Like many retailers reliant on flagship locations or large individual stores in heavily urban areas, ABC Carpet & Home lost revenue when well-heeled New Yorkers, many of whom patronized the retailer, decamped for greener pastures at the height of the Covid-19 pandemic. What’s more, a lengthy renovation of the 60,000-square foot Union Square flagship store further challenged shoppers.
Additionally, even though the flagship, which opened in 1897 on 888 Broadway, was only briefly closed during the pandemic, ABC has struggled to keep up with rent costs since reopening.
In fact, ABC Carpet & Home confirmed to the Post that it is locked in a dispute with its landlord Columbia Property Trust over $1 million in rent that threatens the lease at the flagship store.
Amma421, the special purpose real estate LLC that Cole established for the retailer, already filed for bankruptcy in July.
In recent years, the company’s already scant brick-and-mortar footprint has dwindled down, with the retailer closing its 250,000-square-foot Bronx warehouse in 2016. In 2017, ABC sold the four upper floors of the six-floor flagship store in Manhattan to real estate developer Normandy for $133 million. By the start of 2019, ABC had also closed its carpet store right across the street at 881 Broadway, reconfiguring its selection of rugs to fit onto one floor of the original flagship.
The home retailer did open an outlet in Brooklyn in the borough’s Industry City business hub in 2017 before moving it to another location nearby in May 2021. The 20,700-square-foot location includes more than 4,000 handmade rugs and has a custom bar where customers can consult with both furniture and carpet specialists to customize pieces or access expert advice on specific styles.
Prior to the pandemic, the home retailer sought to overhaul its digital business under Rose, who joined the company in May 2019. While the merchant launched a new website in February last year, only mere weeks before the pandemic broadly shuttered non-essential stores, the late transition hasn’t been able to save the company from losing out on sales. And even with a modernized e-commerce experience, selling big-ticket home goods items that shoppers traditionally want to view in person first presents an uphill battle.
The company’s popular restaurant business, including ABC Kitchen, wouldn’t be affected by a restructuring, the Bloomberg report said.