Strouds to vendors: The check’s in the mail (almost)
February 18, 2003-- Home Textiles Today,
City of Industry, CA — Strouds is scheduled to begin a payout of past due trade debt next week after meeting the recapitalization demands of its chief investor and secured lender, opening the door to a $5 million cash infusion, according to the retailer.
Among others, those demands required the specialty merchant to wrest significant repayment concessions from a sizable portion of its vendor base. In written and e-mailed communications to its vendors this week, Strouds reported that it had achieved a 90 percent acceptance rate from its suppliers — 5 percent more than the required minimum — following a one-week extension of the original deadline.
In addition to beginning the payout to vendors next week, Strouds said the cash would immediately be used to replenish sagging inventory levels.
“With your support we have made great strides in the past few weeks to strengthen Strouds. Not only has the balance sheet been improved with more than $3 million in vendor discounts and $5 million of new capital, but the streamlining program — to ensure that we have an appropriate expense structure for our business — will produce more than $4.5 million in annual savings." stated the Feb. 10 letter, signed by "The Strouds Team."
Company president Rob Valone, declined comment on the letter, although he did confirm that one store had closed. He said the Blossom Hill full-line store in San Jose, CA, was shuttered last month because its lease ended. Valone also stated there were no further staff reductions planned. Yet, there was no indication, either, of from where else the cost savings might be derived.
The company had earlier halted vendor payments and began negotiations with suppliers to head off bankruptcy proceedings.