Wholesale hardware retailer True Value has filed for Chapter 11 bankruptcy after more than seven decades after opening its doors. The company is blaming the weak housing market for the bankruptcy.
In a press release, True Value said it will continue its day-to-day operations at 4,500 independently-owned retailers while it is completing its Chapter 11 process.
True Value blamed its lagging sales on a weak housing market, which stalled due to soaring home prices and elevated mortgage rates, the court filing said. This means there is less demand for new homes, which translates to less sales of lumber and other hardware products.
For perspective, the median sale price of a home in the US as of August is $432,961. The contract rate for the 30-year mortgage loan was 6.32% in the week ending Sept. 10.
What Will Happen To True Value
Following its Chapter 11 filing, True Value will be bought by rival Do it Best. The hardware and lumber wholesaler will pay $153 million in cash.
"Do it Best has a proven track record of driving profitability through the most efficient operations in the industry. This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come," Do it Best President and Chief Executive Officer Dan Starr said in the press release.
True Value's stores will remain open as they are not part of the Chapter 11 process.
Other Hardware With Lagging Sales
True Value is now the latest hardware recording sluggish sales due to the stalling housing market. Consumers have also become more picky about their discretionary purchases.
Other wholesalers such as Home Depot and Lowe's have also reported declining sales since the housing market boomed during the COVID-19 pandemic. However, they are still able to maintain a stronger financial situation than True Value.
That said, big chains like Big Lots and LL Flooring have also filed for bankruptcy. LL Flooring, specifically, will be liquidated after failing to find a buyer, as reported by CNN.
