Debt troubles for Flooring America

BY REGINALD TUCKER 

GARDEN CITY, N.Y. — Floor Covering Weekly has learned that several vendors to the Flooring America group have reportedly put a hold on shipments to the retailer. At issue, sources say, are Flooring America’s slow payments to suppliers and its ongoing management and financial troubles.
     Although many of the group’s suppliers would not comment publicly on the matter, industry sources say Flooring America’s debt situation is keeping it from meeting the credit terms of some of its suppliers. Couple that with recent changes at the company, including sweeping managerial layoffs at its corporate offices and restructuring at the executive level, and you have the makings of vendor apprehension. 
     In a prepared statement, Flooring America did acknowledge the fact that there are some concerns among some of its supply partners regarding payment. However, the retailer disputed the contention that the situation is widespread. “Flooring America continues to have the support and confidence of our primary vendors,” said David Nichols, chairman, president and CEO. “Right now we are addressing concerns relating to other companies in our vendor category. It’s a priority of ours and a daily focus.” 
     So far Flooring America retail members with whom FCW spoke have not been affected by the situation — at least not those on the franchise side of the business. Howard Lester of The Mill Store in LaGrange, Ga., said his business has not yet been impacted because he maintains his own credit line with his suppliers. The only part corporate plays, he said, is in the negotiation of prices from the mills. “We’re not really connected with Flooring America with regard to how they pay the suppliers,” he said. “Flooring America, however, is responsible for their corporate-owned stores.” 
     The unfolding situation with its vendors is not the only troubling development to come out of Flooring America. The company’s newly released results for the fiscal year ended Feb. 5 also paint a bleak picture for the retailer. Operating loss for the period increased to $52.5 million from $37.4 million, while net loss increased to $70.5 million from $19.6 million for fiscal 1999. Diluted loss per share for the period was $3.70 compared to a loss of $1.10 for the fiscal year ended Jan. 31, 1999. Current liabilities total more than $200 million.