After closing down earlier this week, the largest independent wood flooring distributor in the U.S. at more than $600 million in sales, Hoboken Wood Flooring LLC, Wayne, NJ, has filed a voluntary petition for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
According to a report this week from local paper The Record, sales had fallen about 25% each month for the past year - the commercial business development manager for the company attributed the sales losses to the housing downturn, competition from manufacturers going direct, and the company's push to expand nationally.
The latter was emphasized in a Floor Covering Weekly report published shortly after private equity firm Code, Hennessy and Simmons bought the company in 2005 at the peak of the residential housing boom for what some estimated as more than 7X EBITDA, a high multiple considering the coming downturn in Hoboken's key markets. Hoboken bought Superior Products LLC, Elkridge, MD, in January 2006.
Code Hennessy and Simmons has successfully invested in other distribution companies including Beacon Roofing Supply, which is now public. (One potential fallout from the failed investment: Private equity firms that had shifted their focus to distribution may flee.)
While there were likely several factors leading to the fall of Hoboken, the downturn in residential construction compounded those. Industry sources also say Hoboken may have been  ; pushed to pursue an aggressive  ; private-label strategy, creating conflict with its traditional vendors.
The distributor is facing a lawsuit from two wood flooring manufacturers, Columbia Flooring Inc., and Millwood Specialty Flooring Inc., filed in New Jersey District Court on Oct. 30, 2007, demanding more than $1 million in overdue payment for product. (Lawsuit)