Home Retailer Expected to File For Bankruptcy (LinensNThings)

WSJ ^ | 4.11.08 | JEFFREY MCCRACKEN

[BurbankKarl]

Linens 'n Things Inc., a home-furnishings retailer caught by an increasing debt load and shrinking housing market, is expected to file for Chapter 11 bankruptcy-court protection by Tuesday, several people familiar with the matter said.

A Linens 'n Things filing would mark one of the first major retailers to seek bankruptcy protection in this economic downturn. The New Jersey retailer, which sells home products like towels, bath rugs and kitchen appliances, has about 590 stores in 46 states and employs 17,000 people.

Linens would be one of the largest buyouts to go bust since the credit crisis took hold last summer. In February 2006, Apollo Management LP acquired Linens for $1.3 billion. The housing crisis made the home-furnishings space ultracompetitive, and the debt on the company's balance sheet gave it diminished flexibility to ride out the downturn.

In a recent letter to investors, Apollo founder Leon Black acknowledged that the company was troubled, explaining that while it had made operational improvements, its financial results "remain challenged." Apollo filed to go public in a share offering this week.

Linens also is working to avoid or delay filing for bankruptcy protection by meeting Monday with its lenders and largest vendors to work out an agreement, but a deal is unlikely.

Linens has a $15 million quarterly payment due Tuesday on its $650 million bond. Its bondholders already have formed a committee to prepare for a filing and hired counsel. Creditors, some of whom have quit shipping product or are demanding cash on delivery in response to delayed payments, also are organizing to form a committee.

[durasell]

The linens are still selling, it’s those damns “things” that put them under.

[ConservativeMind]

Well, I think it's obvious we need to bail out the owners of Linens ‘n Things. Heck, they should have had access to low cost FED money just like banks, and now investment banks, have.

Our country can't afford to let another home furnishing company suffer at the hands of a bad economy. Surely, they couldn't have forecasted the way the housing market turned sour.

After this, we also need to bail out newspapers, magazines, gentlemen’s clubs, and drug users.

If we don't, our country won't stand for a thing.

[taxcontrol]

Freepers, if you are holding on to any gift cards, store credits or items to be exchanged, be sure and spend them or return them by this weekend. Once they go into bankruptcy, those services may not be available.

[TruthShallSetYouFree]

In February 2006, Apollo Management LP acquired Linens for $1.3 billion.

Actually, they really only paid 1.04 billion, because they had a 20% off coupon.

[ikka]

They have a lot of Chinese made junk and gimmicks in their stores, and maybe people figured out that the $24.95 gizmo was being made in China for $2.

[SevenofNine]

MAN they still in business WHOA actually Karl if I need something I go to Anna Linens hey they got good stuff there

[Moonman62]

LOL, good one.

[Moonman62]

The housing crisis made the home-furnishings space ultracompetitive, and the debt on the company's balance sheet gave it diminished flexibility to ride out the downturn.

I would say it was the buyout and the debt. Bed Bath and Beyond is still ticking.

[durasell]

Kidding aside, 17,000 folks out of work, not to mention suppliers, etc. is a pretty bad.

[CindyDawg]

Huh. I've been meaning to check them out but it's kind of out of the way. I wonder if they will have a going out of business sell

I don't know about where yall live but the last few years we have been saturated with shopping and eating places going up. There are only so many people and we are cutting back. I'm spending more on groceries but less on eating out. I'm looking for sales and 2nd hand items and I'm trying to conserve my trips to town because of gas. I don't think any of that is bad. Business has just got too big IMO.

[Attention Surplus Disorder]

I love it! Thank you! Let’s do it for da towels!

[HAL9000]

We bought some stuff there yesterday. They seemed to have plenty of products in stock.

[headstamp 2]

Linens and Things,

AKA Sheets and Sh**.

[ottbmare]

I don’t think that this had anything to do with the diminution in the housing market but had everything to do with the quality of their merchandise and the way it was displayed. I notice that I am a very representative American female consumer, and if I stop going to a store, I’m just being like every other woman and there are some factors influencing us all simultaneously. I was in L&T a few times over a year ago, looking for stuff, and didn’t have a good experience. Lately I’ve noticed very few cars outside the store. A similar thing is true of Bed Bath and Beyond. We female consumers are tired of what they’re selling. It seems so 1990. The concept has gone bad. We don’t want “sheet sets” and bathroom mirrors and cutesy things for the kitchen anymore.

People who run big chains like this need to pull their heads of out wherever they’re keeping them and do more market research.

[Vince Ferrer]

The linens are still selling, it’s those damns “things” that put them under.

If it can't be described more acurately than "things," its probably discretionary spending.

[CindyDawg]

Bed Bath and Beyond is still ticking.They are in malls aren't they? I need to go places where I can get the most done in the least amount of time. Today I went to Walmart or you could say I went

To the nursery to pick up some straw berry plants

To the RX to get my husband some cough medicine

To the eye doctor to pick up my glasses

To the photo shop to turn in some film

To the stationary shop to pick up office supplies

To the grocery store

I did all of that in about an hour. It would have taken most of the day if I had went to multiple stores.

[durasell]

Impulse purchases destined to adorn self-storage centers.

[VeniVidiVici]

This is why Bed, Bath and Beyond is next:

simplehuman® smartbucket™ 40-Liter Semi-Round Step-On Trash Can

"This stainless steel semi-round step can has a modern, practical design. Its 40-liter capacity and shape is the epitome of efficient living by design. It is even capable of fitting into high traffic areas and has a wide foot pedal for easy access. Lock back lid stays open for large cleanups. 5-year warranty. Uses Code M bin liners. "

Now, for those of you that don't shop at BB&B, how much do you think this SMALL (10gal) trash can is? ...................If you guessed $109.00 YOU WERE RIGHT!!!!!!

[BurbankKarl]

Did you get any rice? I heard Costco was out of rice...due to the worldwide shortage. At least the huge bags are gone.

[txcaprockgal]

and was it made in the People’s Republic of China?

[durasell]

Depends on whether you shop for best price, name brand, or something else...

[BurbankKarl]

Man, no wonder IKEA is always packed.

[CindyDawg]

109 dollars for a trash can? Forgetaboutit.Yall like stainless steel? The home channel says it's in but I don't care for it.

[CindyDawg]

I got rice last week at HEB. Buy 3 lbs and get a pound of beans free.

[durasell]

Here you go...

http://www.ebraunandco.com/

[CindyDawg]

Why should Walmart have a monopoly on convience though? I don’t like the mall caz I feel naked without my cart. These better quality stores might do better if they could team up with other specialty stores where people could get all their shopping done at one place. Not fluff store after fluff store but open in a large area. JAT

[Proud_USA_Republican]

I buy all my sheets, towels, kitchen stuff from bath, bed, and beyond. I love those 20% coupons I get in the mail. I store they on the side until I need something and then use a couple for the bigger ticket items.
I think this has more to do with market saturation, tight margins, and tight credit right now. Companies that loan money are hoarding cash right now paranoid about a long term recession. And they should be worried.

[durasell]

Tough thing to get independent businesses to team up. At the higher end of the market, it would be impossible. The most interesting thing is looking at how much time people require to make a selection in a wal-mart versus a specialty store. At a high end store, what would be a ten or twenty second purchase at wal-mart turns into half an hour or more.

[BigCinBigD]

BUT, IT'S THE ONLY PLACE I CAN FINE LEFT HANDED PLACE MATS!!!
(Sobbing uncontrollably)

[kitkat]

***Business has just got too big IMO. ***

Exactly! Competition for Linens & Things has sprung up in my area, and I’ve been wondering if it hurt them. Perhaps the WSJ is placing too much blame on the housing shortage.

[CindyDawg]

I wonder why? Huh. I hadn’t thought about that. I sent a few minutes looking at cough syrups, comparing prices and best expiration dates and a long time looking for a picture album (too many choices:’) Zipped right thru groceries though.

[CindyDawg]

Sad but we just can’t afford to feed them all.

[buck jarret]

Leon Black will get over this setback. He bought this company with other people’s money, of which he still has much more to spend. He and two partners paid themselves slightly under $1 billion in 2007, deferred for six years, presumably for tax reasons. I expect that he got between 40 and 50% of that. Also, he sold stakes to the California pension fund, the Arabs and other institutional investors just before everything went to hell. So he probably made $1 billion in 2007, excluding capital gains from his already large fortune. $4 billion, according to Forbes. His art collection is supposed to be worth $1 billion or more. And that isn’t flash-in-the-pan contemporary art.

[SeaHawkFan]

Even with 20% off. Bed, Bath and Beyond is still way over priced. Lots of places to get similar stuff for half the price.

[durasell]

Because the higher in price you go, more information is required to make the purchase. And more information is attached to the product. That is to say, you can buy a picture frame at wal-mart for $10.00 and you know what it is and how it looks, and imagine how it looks in the den, etc. Go into a high end store and it’ll be a $2,200 antique 1920s, sterling silver picture frame from Tiffany & Co. in a deco style backed by acid-free paper, blah, blah, blah...

[Octar]

I did all of that in about an hour. It would have taken most of the day if I had went to multiple stores.

We're with you. The Wal-Mart bashers can go pick their noses.

We are rural and we have three Wal-Marts, closest is 25 miles. we shop locally as much as we can, but living 5 miles from a town of 500 people doesn't provide much choice.

Wal-Mart is a savior for rural people. Both for access to a large variety of products, but also for good jobs. Yes, with benefits, contrary to the bashers anti-success whines.

[ArmstedFragg]

...still got sheets on the bed

If you bought the author's logic, that'd have to mean you're a homeowner, since those who live in apartments don't buy linen. Other than a little reduction in discretionary spending, what possible correlation could there be between repossessions and a lack of need for sheets? WSJ's really stretching on this one.

[informavoracious]

For $109, that trash can had better sort recyclables and carry itself out to the curb. Does anyone actually shop in these stores for anything other than Bridal Registry gifts? With so many couples cohabitating before marriage, they’ve already acquired the normal household goods; all that’s left are the uber-expensive stuff in these stores that no one would ever buy for themselves.

[durasell]

Yes, there’s a market for the pricey stuff — but not the mid-range, like hundred buck trash cans.

[Caipirabob]

Actually, they really only paid 1.04 billion, because they had a 20% off coupon.

LOL! Really, that's the only way I'll buy anything there. Everything is so overpriced as it is.

[Ezekiel]

simplehuman® smartbucket™

For that $109 price they ought to rename it the simplesheeple stupidbucket.

[csvset]

If you guessed $109.00

I would have missed that if it were on The Price Is Right.

[sphinx]

Sounds like the problem may be a leveraged buyout. Is the underlying company sound?