Home goods retailer At Home, with 260 stores across 40 states, filed for bankruptcy protection with plans to close dozens of locations as it becomes just the latest chain to cite a slowdown in consumer spending as rising tariffs place "significant pressure" on its business.
The retailer based in the Dallas area has entered into an agreement with its lenders to eliminate about $2 billion of debt and provide $200 million in financing to help it reorganize as part of its Chapter 11 filing in bankruptcy court, At Home said in a statement Monday.
As part of the agreement, At Home expects its business to transition ownership to its lenders, which include Redwood Capital Management, Farallon Capital Management and Anchorage Capital Advisors LP, the statement said.
At Home CEO Brad Weston said in the statement that the retailer has taken "deliberate steps to strengthen the foundation of our business" over the past several months. And while progress has been made, "we are operating against the backdrop of an increasingly dynamic and rapidly evolving trade environment as we navigate the impact of tariffs."
Against that economic backdrop, At Home reflects broader struggles among a number of retail chains across the country.
Store closings were outpacing store openings as of May, with Coresight Research reporting that U.S. retailers had announced 5,140 store closings and 3,689 store openings — numbers that don't include closures from At Home or plus-sized apparel seller Torrid, which said in June it is planning to close roughly 180 stores.
'Continued volatility'
Filing for bankruptcy protection in a Delaware court on Monday is expected to improve At Home's "ability to compete in the marketplace in the face of continued volatility," Weston added. Upon emergence of this pre-arranged restructuring process, Weston said At Home and its new owners will have a "meaningfully strengthened balance sheet."
At Home plans to close 26 of its underperforming brick-and-mortar stores in 12 states by Sept. 30 as part of its bankruptcy proceedings, according to court documents.
At Home joins other retailers in both filing for bankruptcy protection and closing stores as tariffs and a slowdown in consumer spending jolts the industry. Joann, Forever 21 and Rite Aid have all shut locations after seeking protection from creditors.
At Home's extensive debt on its balance sheet — not its real estate — led to the bankruptcy filing, said Neil Saunders, managing director at retail analyst GlobalData. The elimination of debt under Chapter 11 will provide a more stable basis for the retailer to operate. However, Saunders said, At Home is facing more than a debt issue.
"At Home is also suffering from the slowdown in consumer demand for home furnishings, which is partly a consequence of low consumer confidence and a sluggish housing market," Saunders said in an email. "These dynamics are unlikely to change in the near term."
At Home's proposition is weak, Saunders said, with its business model having been built on "huge stores stocking lots of products in warehouse-style fashion." At Home also faces steep competition from rivals like Ikea and Wayfair.
"There is way too little inspiration and not nearly enough excitement to draw people into the stores — particularly in areas where competition is high," Saunders said. "Chapter 11 will not solve these problems and while the debt reduction will buy time, At Home needs to go back to the drawing board to assess its wider business model."
At Home did not immediately return an email request for a comment from CoStar News.
Opportunities for other retailers
At Home's decision to part with some of its real estate comes as retail vacancy sits at all-time lows throughout the United States and presents a potential opportunity for other brands looking to expand, said Lynn Van Amburgh, a senior vice president at Dallas-based real estate firm Weitzman. Van Amburgh is not involved directly with At Home but is a retail broker with decades of leasing experience.
At Home's real estate includes some high-quality spaces in sought-after locations, Van Amburgh said.
"This allows another retailer potentially looking at these markets to enter them in some good real estate," Van Amburgh said in an interview.
Some retailers are intensely competing for prime locations across the U.S, resulting in tenants paying higher rents and leasing spaces as soon as, and sometimes even before, they become available, according to Brandon Svec, CoStar's national director of U.S. retail analytics.
The average time from when available shopping center space becomes available to securing a tenant has declined to just 7.3 months through the first five months of the year, the quickest retail leasing pace recorded since CoStar started tracking the national retail market in 2008.
Most of At Home's proposed closings are slated for California, including one in San Jose where the landlord is Lowe's, according to court documents. Here are the states where At Home told the court it plans to close stores:
California: 1982 E. 20th St. in Chico; 2200 Harbor Blvd. in Costa Mesa; 26532 Towne Center Drive in Foothill Ranch; 2900 N. Bellflower Blvd. in Long Beach; 3795 E. Foothills Blvd. in Pasadena; 8320 Delta Shores Circle S. in Sacramento; 750 Newhall Drive in San Jose; 2505 El Camino Real in Tustin.
Florida: 14585 Biscayne Blvd. in North Miami.
Illinois: 13180 S. Cicero Ave. in Crestwood; 5203 W. War Memorial Drive in Peoria.
Massachusetts: 300 Providence Highway in Dedham; 571 Boston Turnpike in Shrewsbury.
Minnesota: 2820 Highway 63 South in Rochester.
Montana: 905 S. 24th St. West in Billings.
New Jersey: 461 Route 10 East in Ledgewood; 1361 NJ-35 in Middletown Township; 301 Nassau Park Blvd. in Princeton.
New York: 300 Baychester Ave. in Bronx; 6135 Junction Blvd. in Rego Park.
Pennsylvania: 720 Clairton Blvd. in Pittsburgh.
Virginia: 19460 Compass Creek Pkwy. in Leesburg; 8300 Sudley Road in Manassas.
Washington: 1001 E. Sunset Drive in Bellingham; 2530 Rudkin Road in Yakima.
Wisconsin: 3201 North Mayfair Road in Wauwatosa.