Taking Responsibility

Yesterday, one of our much larger competitors, Boyles Furniture, filed Chapter 11. They had already closed several stores, but remained a Top 100 furniture store with operations in NC, SC and Florida. They are going to continue to operate under Chapter 11 protection, and their objective is to shed the debt that has burdened them so badly in the recession.

What burns me is that Boyles, and companies like them, incurred this debt willingly as part of over-aggressive expansion plans. They signed contracts, procured loans, built up their empire without consideration of a downturn. However, as this story in the Charlotte Observer reports, Boyles seems very non-plussed about the effects of declaring Chapter 11. “We had to file to do what was right for the creditors, employees and customers associated with our operations,” founder Larry Hendricks said in a news release. Whaaaat? Dear Mr. Hendricks, what exactly do you think happens when you declare bankruptcy? These are the exact parties that get hurt when you erase debt under Chapter 11. It was your own business decisions that led you to this point. The economy did not help at all, for sure, but a little restraint could have gone a long way.

I consider Boyle's a good competitor, even though we may not even be on their radar. They have nice showrooms, a high-end supplier portfolio, and a good designer base. However, they over-expanded and ignored some fundamental business principles. Now their creditors and dismissed employees are paying the price. Its not "right" for any of those parties, nor for customers who may now have to worry about their furniture being delivered.

Rest assured, Carolina Rustica is in terrific financial condition, with no debt and year-to-date growth of 8% over last year. We will continue to act in a conservative and mutually-beneficial fashion with our customers, employees, and suppliers.