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N.J.’s American Shuts Its Doors

PENNSAUKEN, N.J. — American Appliance, the largest independent brown and white goods dealer in the mid-Atlantic market, has shut its doors indefinitely.

Without warning, the privately-held chain dismissed its employees and shuttered all 30 stores last week after a major creditor reportedly called in loans that underwrote upward of 70 percent of American’s inventory.

No federal bankruptcy filings had been made and phone calls to company headquarters here went unanswered.

According to local press reports, a statement taped to the door of American’s headquarters office confirmed that the retailer had “ceased operation” and was liquidating inventory to satisfy its creditors. The statement cited changes in the commercial credit market as the main cause of the shutdown, but also pointed to sluggish demand for air conditioners, soft holiday sales of consumer electronics and the slowing economy as contributing factors.

American had also faced stiff competition from No. 1 majaps merchant Sears and recent market entrants Best Buy and Lowe’s.

A report in the Philadelphia Daily News quoting a former American executive, and other sources close to the company, identified the creditor as GE Capital, which also pulled the plug on Montgomery Ward in December.

American, a member of the NATM buying group, was founded in 1968 by president and CEO Bill Rowland Jr., and maintained stores in Delaware, New Jersey and Pennsylvania. The company, which had sales of $180 million last year, built its business in part through what it called “aggressive value pricing,” which also led to run-ins with state regulators.

Bill Trawick, executive director of NATM, acknowledged that American “was struggling a little for the last year,” but called the manner of its demise “a shock for everyone.” He described Rowland as “a good merchant” who was caught between the slowing economy and a “very aggressive” pricing policy that was further sharpened by the entry into his market of competitive national chains.

“It’s devastating,” Trawick said. “You have over 600 employees without jobs, and what happened is not healthy for NATM or our industry.”

Doug Kelly, general merchandise manager for major appliances at New York area powerhouse P.C. Richard & Son, agreed with Trawick’s assessment. “You have an appliance industry plagued with over-capacity sickness, new national competitors, and a race to the bottom on pricing,” he said. “To survive, you have to be real low on the bottom, but then how do you merchandise the high and the low? It’s become a very challenging, complex business.”

American ranked 14th on the TWICE Major Appliance Retail Registry, based on its 1999 sales, and 70th on the TWICE CE Retail Registry for its 2000 sales.