Z Gallerie has filed for bankruptcy for the third time and may liquidate if it can’t find a buyer, the retailer said in court filings.
The retailer, owned by Merrillville, Ind.-based DirectBuy Home Improvement, operates 21 stores in nine states including three in Texas. Local stores are in North Dallas across from Galleria Dallas, inside the Shops at Willow Bend mall in Plano and in Houston.
Z Gallerie said in court filings that it was running out of cash due to “underperforming retail stores, adverse macroeconomic trends, and industry-specific headwinds” that included a stagnant housing market. The retailer filed for bankruptcy protection Monday in U.S. Bankruptcy Court for the District of New Jersey in Newark.
It listed assets and liabilities of as much as $100 million each in its bankruptcy petition.
The company has secured a $1.1 million debtor-in-possession financial facility from ZG Lending SPV, its existing secured lender, according to court papers. It plans to retain Stump & Company, a mergers and acquisition advisory firm, to help market its assets.
If Z Gallerie can’t find a buyer willing to invest in brick-and-mortar stores, the company will shut down all of its 21 locations along with its warehouse by the end of the year, Robert Fetterman, the company’s chief financial officer and interim chief executive officer said in a court filing. He also said the firm was prepared to trim its 250-person workforce as a means to save cash.
While consumers continue to spend, demand for furniture has stalled since the height of the pandemic. If it ends up liquidating, Z Gallerie will be one of several furniture retailers that have called it quits in recent months, including Mitchell Gold + Bob Williams and Louis Shanks of Austin. West Elm’s furniture sales declined 20.8% in the most recent quarter and Pottery Barn sales declined 10.6%.
Z Gallerie started out as a poster shop in 1979.
Founded by siblings Carole Malfatti and Joe and Mike Zeiden, the company later expanded into home décor and furnishings. The retailer reorganized in bankruptcy the first time in 2009 and at one time grew to 75 stores. By 2019, it was back reorganizing in bankruptcy, closed more stores and that time attracted buyer DirectBuy.
At one time, Z Gallerie had seven stores in Texas.
Bloomberg contributed to this report.
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