Economic distress in the furniture retail sector is driving major home furnishing companies to close stores and manufacturing facilities, as well as file for Chapter 11 bankruptcy.
The furniture industry has cited declining sales, as a result of a multi-year housing slump, and rising product and labor costs driven by inflation and higher tariffs, for a reduction in furniture company sales and profits.
Furniture chains seek restructuring pros
Financial distress has led furniture chains, such as New Mexico-based American Home Furniture & Mattress, to seek restructuring professionals to solve their economic issues.
Among the reasons for distress has been home sales stagnation in recent years, as the real estate industry reported flat sales in 2025, registering 4.061 million compared to 4.062 million sales in 2024.
More staggering was that the number of sales was the lowest annual home sale total since 1995, according to Realtor.com.
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American Home Furniture bankruptcy
The parent of Albuquerque-based furniture chain American Home Furniture & Mattress filed for Chapter 11 bankruptcy with plans to reorganize its business, close certain stores, and continue operating.
“We are not going out of business,” the company said in a message on its website. “Our Albuquerque locations remain open, and we continue to fulfill all existing and new customer orders. All gift cards and warranties remain valid.”
The 90-year-old furniture chain’s owners, AFC Acquisition Corporation, filed their Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Mexico in Albuquerque on March 4, according to Inforuptcy.
The company filed a motion in bankruptcy court seeking to use its cash collateral while its case proceeds.
Freeway work contributes to distress
The debtor blamed a prolonged freeway construction project near its Albuquerque stores and broader economic pressures, such as inflation and tariffs, for its financial distress, according to its Chapter 11 reorganization update & customer FAQs on its website.
The company, founded in 1936, is consolidating its operations and closing its Santa Fe and Farmington, N.M., stores, after conducting floor model sales at those locations. The two Albuquerque stores will remain open to serve all of their New Mexico customers.
Furniture sales declined in 2025
The furniture industry believes the housing slump has affected furniture sales as sales declined by 0.82% for 2025, compared to 2024 unadjusted, according to the CNBC/National Retail Federation Retail Monitor.
For January 2026, furniture and home furnishings sales declined 0.31% month over month seasonally, the report said. February results have not been released yet.
Other major furniture companies have also closed stores this year.
Restoration Hardware said it will close its RH Outlet location in Milwaukee on March 1, as it is being converted to an approved hotel use.
More bankruptcies:
- 73-year-old family diner franchisee files Chapter 11 bankruptcy
- More troubled regional airlines file for Chapter 11 bankruptcy
- Major department store brand liquidates in Chapter 11 bankruptcy
The luxury furniture brand did not make a statement with a reason for the closing, other than a note outside the store announcing the closure.
Major global outdoor furniture manufacturer and dealer ScanCom International has ceased operations after facing challenges from the Covid-19 pandemic that it could not overcome.
The Copenhagen-based global designer and manufacturer of outdoor furniture is shutting down its business after attempting an unsuccessful turnaround over the last two years, according to a March 3 company statement.
American Home Furniture products:
- Living Room
- Dining Room
- Bedroom
- Home Office
- Entertainment
- Kids and Nursery
- Organizational Storage and Shelves
- Mattresses
- Outdoor Furniture
- Decor Rugs
Related: 31-year-old furniture giant closes down after failed turnaround
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