Loves Furniture Files Chapter 11

A love furniture store in Toledo, OH (Image credit: Toledo Blade)

Loves Furniture, a Michigan regional retail startup that began operations in 2020 when the pandemic broke out, has filed for bankruptcy protection as bills piled up and warehouse, fulfillment and logistics issues hampered its operations.

The company, a successor to Art Van Furniture, owed vendors more than $ 10 million and listed assets of $ 38.6 million.

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

The company said it had strong sales initially last year, but the compliance issues and lost sales resulted in vendors refusing to ship products to complete orders, which was 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 more stores have been leased to Preferred Furniture Promotions. There were stores in Michigan, Pennsylvania, Ohio, Maryland, Virginia, and Illinois.

Loves said many of the problems were caused by Penske, its contract logistics service provider. He claimed he sent orders to the wrong stores and Loves then billed them for shipping to the wrong store, back to the warehouse, and then back to the right store. Penske used its own WMS to manage inventory and fulfillment at the Loves distribution center in Burton, MI.

Loves said it paid $ 8.3 million to Penske for its services, while the logistics company claims it still owes more than $ 1.8 million, an amount that Loves says is controversial.

On December 29, Penske removed its employees and trucks from the Loves distribution center and denied Loves the use of its WMS to locate goods in the 1 million square foot facility, suspending orders, deliveries and requesting refunds. This resulted in Loves canceling customer deliveries, resulting in reimbursement requests that “continued to adversely affect Loves’ available cash and the profitability of its business.” Earlier this month, Penske threatened to sell Loves’ inventory when the retailer defaulted.

On January 6, Penske filed a lawsuit against Loves over his overdue balance and filed a motion to prevent Loves from moving or delivering inventory in his DC.

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