Flooring retailer goes bankrupt

Four bay area Flooring America stores close as the Georgia firm faces losses and accounting questions.

By MARK ALBRIGHT

© St. Petersburg Times, published June 20, 2000

The nation's largest carpet and floor coverings retailer filed for protection from creditors in US. Bankruptcy Court, then closed four of its 15 Flooring America stores in the Tampa Bay area over the weekend.

The stores formerly operated as New York Carpet World and CarpetMax, names that were abandoned months ago after years of operation. The outlets closed are in Brooksville, Largo, Tampa and St. Petersburg. About a dozen employees locally lost their jobs.

The name change had been one leg of an ambitious plan to create a dominant player in the highly fragmented floor covering industry that generates sales of $12-billion a year.

Founded in 1991 as Maxim Group Inc., the Kennesaw, Ga.-based company was supposed to become the first coast-to-coast flooring products retailer.

The company changed its name to Flooring America Inc. The collection of 850 franchised stores was augmented with 260 CarpetMax stores acquired from a carpet manufacturer. Actor and former Olympic gymnast Cathy Rigby signed on as spokeswoman for a $46-million advertising campaign that promoted the 1,100-store chain's new name.

At the same time, however, the company was drowning in losses, answering securities regulators' questions about its accounting practices after restating its 1998 earnings last year and defending itself in 11 shareholder lawsuits. Chairman and chief executive A.J. Nassar was ousted May 10 after nine years at the helm and replaced by David Nichols, former CEO of Mercantile Stores Inc., the defunct department store that once operated Gayfers in Clearwater.

Flooring America has closed 59 of 288 company-owned stores so far as it tries to re-focus on being more of a franchiser than store owner. "There may be more store closings," said Glen Jackson, a company spokesman.

Flooring America stock, which fetched up to $9.25 a share a year ago, sold at 37 cents a share before trading was halted by the bankruptcy filing Thursday.

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