A health improvement company now files an unexpected bankruptcy to get out of its brick and mortar leases that have not performed well.
American Home Fitness, based in suburban Detroit, filed for Chapter 11 bankruptcy protection on April 2.
The company has assets between $1 and $10 million with liabilities between $100,000 and $500,000.
The bankruptcy filing will allow the company to get out of leases for brick-and-mortar locations that have not performed well in the post-Covid era.
“This company was performing really well,” the company’s legal representative Charles Bullock told Crain’s.
“In fact, during COVID, it had very strong years. Post-COVID, there’s been a real decline in at-home exercise.
Foot traffic is down significantly at their stores, and they still have leases that they have to pay on.”
The company’s Chapter 11 bankruptcy filing said that there will be funds available for unsecured creditors.
American Home Fitness intends to keep operating after its reorganization.
American Home Fitness also plans to honor the $12,500 in gift cards it has outstanding.
“The debtor filed this bankruptcy to reorganize its financial affairs to better meet market demand in the current retail environment,” the filing said.
“The debtor is confident in its ability to emerge from its reorganization as a stronger, more efficient operation.”
American Home Fitness, while only a regional brand, has been around much longer than its famous rival, Peleton.
“As a locally owned and operated business since 2001, American Home Fitness understands and values our responsibility to the local communities that we operate in,” the company shares on its website.
The company makes and sells a vast array of exercise equipment ranging from old-school weights to all types of connected fitness devices.
“Every member of our team is experienced using and maintaining every piece of equipment we sell.
We are athletes, trainers and fitness experts. We listen to your needs and your goals, and we help you find the perfect equipment to help satisfy both,” the company posted.
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Other Economy News Today
A massive discount retailer is now closing all 371 stores and wind down its business operations after more than four decades.
99 Cents Only Stores will close all of 371 stores according to the City of Commerce discount chain.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” interim Chief Executive Mike Simoncic said in a statement.
“Unfortunately, the last several years have presented significant and lasting challenges in the retail environment.”
He cited multiple factors, including the “unprecedented impact” of the COVID-19 pandemic, shifting consumer demand, persistent inflationary pressures and rising levels of shrink — an industry term that refers to loss of inventory attributed to reasons such as shoplifting, employee theft and administrative errors.
Combined, those issues “have greatly hindered the company’s ability to operate,” Simoncic said.
99 Cents Only has stores in California, Arizona, Nevada and Texas and has about 14,000 employees. The privately held company said it had reached an agreement with Hilco Global to liquidate all of its merchandise and dispose of fixtures, furnishings and equipment at its stores. Sales are expected to begin Friday.
Hilco Real Estate is managing the sale of the company’s real estate assets, which are owned or leased, reports The LA Times.
The announcement by 99 Cents Only reflects a larger weakness in the dollar-store category, said Brad Thomas, equity research analyst at KeyBanc Capital Markets.
Dollar Tree, a Chesapeake, Va.-based retailer, announced last month that it was closing 600 of its Family Dollar stores this year and an additional 370 in the next few years, he noted.
“It’s been trying times for many, many retailers,” he said.
“What’s interesting is that what started out as a boon to retailers in the pandemic, with all those stimulus checks, quickly turned into a very troublesome time.”
Rising wages, inflation and higher losses due to shrinkage have reduced profits for retailers in a deep-discount sector where margins are already extremely low.
99 Cents Only, with its large base of California stores, has been under particular wage pressure, he said.
And it’s at a disadvantage compared with larger chains such as market leader Dollar General, which has a store count close to 20,000 — “a sales base and a store base that is multiple times larger than 99 Cents,” Thomas said.
Last week, Bloomberg reported that 99 Cents Only was considering a bankruptcy filing as it contended with a liquidity shortfall.
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