Corporate Obituaries: Linens 'N Things

The bedbugs didn’t get Linens ‘N Things, but the housing crunch and credit crisis chewed the company to dust.

The retailer expired at age 13 after a valiant fight to reorganize following Chapter 11 bankruptcy. Bed Bath & Beyond (BBBY) and other competitors in home furnishings, housewares and consumer electronics hardly noticed the death of the New Jersey-based company, and few shoppers mourned - though many took notice of the liquidation sales.

Apollo Management bought Linens ‘N Things for $1.3 billion in 2005 and took the retailer private, knowing that turning the company around would be difficult. But the economy was strong at the time, and its prospects looked good. The buyout firm set goals for same-store sales and earnings in an effort to tighten the chain’s operations.

Linens ‘N Things showed early promise in its slugfest with larger competitors, but was later crushed by the nation’s economic downturn. Consumers felt the pinch and cut back on spending. Larger companies were better prepared for tough times, but sales at Linens ‘N Things never caught up with its highly leveraged balance sheet.

The company filed for bankruptcy protection in May and planned to reorganize, a painful but far from fatal condition.

“We need a good fresh start,” executive chairman Robert DiNicola told reporters last spring. “We get one chance at this.”

The company hoped to get back on its feet by 2009, but, in November, Linens ‘N Things joined Shoe Pavilion and Mervyns in announcing a liquidation. In short, it could no longer compete, and the owners were forced to take the company off life support.

Going-out-of-business sales quickly followed the company’s announced liquidation, an apparent attempt to catch holiday shoppers in a downbeat market. Many financially troubled retailers use the holiday shopping season to get the cash needed to reorganize the company in the following year - but the credit crunch made this tactic impossible for Linens ‘N Things.

The company once had 589 stores and slashed that number to 371 after filing for bankruptcy protection. However, some of the remaining outlets appeared unlikely to become profitable and the company gave up, opting to close rather that reorganize.

Few will miss Linens ‘N Things - the chain that always played catch-up to its larger rivals.

There will be no memorial service. Former customers should check the competition for bargains, as they have always done.