Garden Ridge Files Chapter 11
The Garden Ridge Corporation announced that it and its subsidiaries have filed to reorganize under Chapter 11 with the primary goal of renegotiating store lease agreements and certain other arrangements. The company filed the petition with the U.S. Bankruptcy Court for the District of Delaware.
Over the last nine months, Garden Ridge has successfully implemented initiatives designed to improve profitability and return to a merchant-driven strategy, which emphasizes a wide variety of home décor and crafts, a breadth selection within each category and savings.
Garden Ridge said it has been achieving improving results, with same-store sales increasing 5.4 percent in December 2003 and 2.6 percent in January 2004. However, based on extensive analysis of this lease agreement, the company believes it is paying significantly over-market rates at several stores, which has affected the profitability of those stores and the overall liquidity of the company. Chapter 11 provides Garden Ridge with the vehicle to improve liquidity and reject uneconomic leases.
Additionally, the company said that its primary shareholder, Three Cities Research, is in discussion regarding an additional investment in Garden Ridge.
According to Jack Lewis, president and chief merchandiser officer, “Our investors and lenders recognized that we have a fundamentally sound business plan. Because our restructuring is focused primarily on renegotiating our store lease agreements, we expect to successfully emerge from Chapter 11 in 90-120 days.”
Garden Ridge said it would seek to close four stores, which do not fit into its strategy in the next several weeks. There will be three stores close in the metro Houston area and one in Cincinnati.
The company said it could close additional stores during the course of its reorganization proceedings. However, Garden Ridge is committed to reopening stores in every market it is in today and entering new markets as well, providing it can find stores that fit its profile and negotiate fair market lease terms. It is currently soliciting new landlords to fins prospective sites to open new locations and continue to serve its customers. For more information go to www.gardenridge.com.