Loves Furniture Files Chapter 11

Loves Furniture feature

A Loves Furniture store in Toledo, OH (credit: Toledo Blade)

Loves Furniture, a regional Michigan retail startup that went into business in 2020 just as the pandemic was emerging, has filed for bankruptcy protection as bills piled up and inventory, fulfillment and logistics issues hamstrung its operations.

The company, a successor to Art Van Furniture, said it owes more than $10 million to vendors, while listing assets of $38.6 million.

Loves said in its filing that inventory issues in particular caused problems with customers when items could not be located in a warehouse to ship to a store, leading to negative reviews on social media, canceled orders and refunds.

The company said it had initial strong sales last year, but the fulfillment problems and lost sales led vendors to refuse to ship product to complete orders, causing a domino effect, according to the filing.

Loves is in the process of liquidating its 25 remaining stores to raise cash and continue operations, while five other stores were leased to Preferred Furniture Promotions. It had stores in Michigan, Pennsylvania, Ohio, Maryland, Virginia and Illinois.

Loves said many of the issues were caused by Penske, its contract logistics provider, which it claimed sent orders to the wrong stores and then charged Loves for shipping to the wrong store, back to the warehouse and then out again to the correct store. Penske used its own WMS to manage the inventory and fulfillment at Loves distribution center in Burton, MI.

Loves said it has paid $8.3 million to Penske for its services, while the logistics company claims it is still owed more than $1.8 million, an amount Loves said is in dispute.

On Dec. 29, Penske removed its employees and trucks from Loves distribution center and refused to allows Loves to use its WMS to locate merchandise in the 1 million square foot facility, causing orders and deliveries to be suspended and refunds to be requested. This led Loves to cancel customer deliveries, leading to demands for refunds “further negatively impacting Loves’ available cash and the viability of its business.” Earlier that month, Penske threatened to sell Loves’ inventory when the retailer fell in arrears.

On Jan 6, Penske filed suit against Loves for its past due balance and filed a motion seeking to prevent Loves from moving or delivery inventory in its DC.