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DETROIT - Art Van Furniture, the Michigan-based furniture and mattress retailer, announced Thursday it is shutting down and will begin liquidation sales at all of its company-owned stores in Michigan, Illinois, Missouri and Ohio.
The shock announcement comes just three years after the company's sale by the Van Elslander family to a private-equity firm.
Boston-based private-equity Thomas H. Lee Partners bought a majority stake in Art Van Furniture in early 2017, about a year before the death of company founder Archie Van Elslander at age 87.
Art Van is expected to declare bankruptcy early next week. The filing would be a Chapter 11 reorganization, yet potentially could result in the permanent closure and liquidation of all Art Van Furniture stores - unless one or more buyers step forward to rescue the retailer.
'Despite our best efforts to remain open, the company's brands and operating performance have been hit hard by a challenging retail environment,” Diane Charles, Art Van Furniture spokeswoman, said in a statement.
The Coralville Art Van - the only Art Van in Iowa - is a franchise and and will remain in business.
'We are here and we are open,” owner Deb Emmert said, noting her store eventually will change brand names.
The liquidation sales will begin Friday at all Art Van Furniture, Art Van PureSleep and Scott Shuptrine Interiors in Michigan, Illinois, Ohio, Indiana and Missouri, as well as select Levin and Wolf stores in Maryland and Virginia. The Art Van stores are to close in 60 days.
Art Van has about 190 stores and about 3,100 employees. Twenty of the stores are franchise locations, situated in the company's 'outmarkets” in Michigan and in Indiana.
The Art Van liquidation and anticipated bankruptcy - nearly unthinkable a few years ago - marks the latest collapse of a popular and once-healthy retail brand in the wake of an acquisition by a private-equity firm.
Payless ShoeSource, children's clothing store Gymboree and a well-liked New York grocery chain called Fairway Market met similar fates in recent years.
Private-equity firms use debt to acquire companies, and the debt is then owed by the company.
The debt loads can leave companies with little room to maneuver if business conditions deteriorate. And any problems that arise can be exacerbated by the fees that private-equity firms ordinarily charge companies in their portfolios.
A source familiar with Art Van's finances says the company has struggled amid changes in the furniture and mattress retail business, especially the growth of online retail and decline in foot traffic at traditional bricks-and-mortar stores.
Gross sales have been on a downward trend, the source said who wasn't authorized to speak on the record.
The company also may have overexpanded in recent years.