In a move that reflects the ongoing struggles of discount retailers amid economic shifts, American Freight, a well-known Ohio-based furniture chain, has announced it will close 328 of its stores across the United States, including 10 in Southern California. The closures are a response to the same economic pressures that have impacted other retail giants like Big Lots and 99 Cents Only, including rising mortgage rates, a slowdown in home buying, and reduced demand for home remodeling.
The Struggles of Discount Retailers: A Response to Economic Challenges
Founded in 1994, American Freight has faced mounting difficulties over the years, exacerbated by the effects of the current economic environment. The chain, which specializes in discount furniture, appliances, and mattresses, is the latest victim of high mortgage rates that have slowed the housing market. As many homeowners have put off buying or remodeling their homes, the demand for affordable home goods has also diminished, leaving American Freight struggling to maintain profitability.
The company’s closures include locations across the country, with 15 stores affected in California alone. The California closures are particularly significant, as they represent a loss of 10 stores in the Southern California region. These closures are set to occur by the end of the year, marking the latest development in a challenging retail environment.
Franchise Group’s Financial Troubles and Bankruptcy Filing
American Freight’s parent company, Franchise Group, has also been impacted by broader financial difficulties. The company, which also owns brands like Vitamin Shoppe and Pet Supplies Plus, purchased American Freight in 2020. Additionally, Franchise Group acquired Sears Outlets and Buddy’s Home Furnishings. However, despite these acquisitions, Franchise Group has struggled financially, defaulting on $2 billion in loans used to fund its retail ventures.
This financial turmoil has led Franchise Group to file for bankruptcy protection this month. The bankruptcy filing comes after substantial losses, managerial challenges, and the difficulties caused by the financial backer, B. Riley Financial, which is based in Los Angeles.
Impact on the Retail Landscape and Future Outlook
The closure of American Freight stores is a sign of the continuing shift in the retail landscape, where discount furniture chains are increasingly finding it difficult to thrive in the face of rising interest rates and a slowdown in consumer spending. American Freight’s closures follow the same trend seen in other discount chains, such as Big Lots and 99 Cents Only, which have also scaled back operations amid the economic downturn.
While these closures are a blow to the discount home goods sector, they also highlight the challenges retailers face in a post-pandemic economy, where inflation, supply chain disruptions, and high interest rates are straining consumer purchasing power.
Conclusion: Retail Adaptation Amid Economic Pressures
The decision by American Freight to close 328 stores nationwide underscores the struggles faced by discount retailers in the current economic climate. With high mortgage rates reducing the demand for home goods and remodeling, many chains are forced to adjust their business models or close locations altogether. For American Freight, this decision is part of a broader pattern of retail closures that has affected numerous companies in recent years.
As we move toward the end of the year, it remains to be seen how other retail chains will adapt to these ongoing economic challenges. For now, American Freight’s closures are a stark reminder of the difficulties facing discount retailers in a shifting market, and they signal that more changes may be coming to the retail landscape.