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Waterbed Gallery Consolidates After Chapter 11 Filing

February 27, 1992|TED JOHNSON | SPECIAL TO THE TIMES

FULLERTON — The Waterbed Gallery will close its Tustin showroom and consolidate its warehouse operations in an attempt to emerge from bankruptcy protection within a year.

The Fullerton-based company, hurt by consumers' reluctance to buy big-ticket items, joined about a half-dozen furniture retailers in Southern California who have filed for bankruptcy in recent months.

Waterbed Gallery had already closed a showroom in Canoga Park before it filed for Chapter 11 bankruptcy protection from creditors on Feb. 18.

"Obviously, it is a tough position for us," said President David B. Pagard. "We've been struggling for months to adapt to changes in the marketplace. We were doing everything we could to avoid filing."

After the consolidation, the 15-year-old company will be left with 110 employees and nine stores in Southern California, along with showrooms in Montgomery Ward stores in Torrance and Huntington Beach. The Tustin store will close sometime in the next 10 days, Pagard said.

"We're going to do everything we can, under the guidelines of federal bankruptcy law, to meet the needs of our customers," Pagard said. The company had about $18 million in sales for its fiscal year ended in June, 1991, but sales in the current year were running at an annual rate of about $15 million, he said.

In its bankruptcy petition, the company reported $3 million in assets and $2.3 million in debts. The company's largest creditors are Arbek Manufacturing in Chino, owed $122,000, and Advanced Sleep Products in Carson, owned $111,000.

Bud Cunningham, vice president and general manager of Arbek, said Waterbed was less than 30 days behind on its debt.

"There's a lot of people out there like that with the same problems," he said. "We anticipate doing good business with them in the future."

Pagard said he believes Waterbed Gallery may be in a better position to recover financially than some other general furniture retailers such as RB Furniture, an Irvine company that filed for bankruptcy in November. Unlike RB, Waterbed Gallery, which sells mainly water beds, will be able to direct its limited advertising dollars at a specific item, Pagard said.

Sun Valley Waterbeds, based in Phoenix, recently emerged from a six-month reorganization under bankruptcy protection by closing some stores and focusing its marketing efforts on water beds rather than other bedroom products such as end tables and dressers, said Ralph Bloch, executive director of the National Waterbed Retailers Assn. in Chicago.

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