Gracious Home Files for Bankruptcy Protection

Rising losses hurt retailer’s liquidity
December 16, 2016David Gill

       NEW YORK-Specialty retailer Gracious Home has filed for Chapter 11 bankruptcy protection with the U.S. bankruptcy court for the southern district of New York.

This is the second Chapter 11 filing for the beleaguered retailer in six years. In a separate affidavit filed with the court, CEO Robert Morrison said Gracious Home has “suffered substantial net earnings losses for the past several years.” The net loss for calendar 2015 was about $2 million, and Gracious Home expects its net loss for this year will total about $4 million, Morrison said.

Gracious Home’s business has trended downward due to general economic conditions and the highly competitive environment in home furnishings retailing, Morrison said. The company “faced increased competition from Bed Bath & Beyond, Lowe’s and even CVS for certain of its nonspecialty housewares, e.g. light bulbs, which had been a major staple of {its} business historically,” he said. “Moreover, customers now have the option of purchasing goods at a lower cost online, with many retailers absorbing shipping costs. All of the forgoing compressed the margins that [the company] could earn from their products.”

There had been some hope for the business after Gracious Home was acquired by an investment team led by former Walmart executive Dottie Mattison and David Mitchell, president of real estate firm Mitchell Holdings, last year. The new ownership began implementing some new ideas and strategy. However, expenses continued to outmatch revenues, and Gracious Home was unable to pay its debts when due, Morrison said.

Six of Gracious Home’s chief creditors are landlords of its stores and other facilities, to whom the company owes about $3.5 million.

Gracious Home plans to attempt continuing doing business. The company believes “there is a viable business remaining, albeit on a smaller scale,” Morrison said.

According to other press accounts, it has closed all of its stores except for the one located in the Upper West Side of Manhattan, 1992 Broadway. The company is also seeking funds to continue the business and pay its debts “while using the breathing room afforded by the bankruptcy code to formulate a plan of reorganization,” Morrison said.

David GillDavid Gill | Contributing Editor

David Gill is a contributing editor to HFN.


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