Nearly one year ago, Queen City Audio, Video & Appliances started its 60th anniversary year in a precarious position: Chapter 11 bankruptcy.
The Charlotte-based company was, like many appliance retailers, reeling from the sustained housing downturn.
When home values plummeted, fewer people could move, fewer developers could build, and the home appliance market where sales had grown in the boom times began to feel the pain.
After four years of fighting the tide of dwindling demand, Queen City filed for Chapter 11 bankruptcy protection in February 2012, listing assets of between zero and $50,000 and liabilities of between $1 million and $10 million.
CEO Roddey Player, who grew up watching his dad work many a late night to build the business, faced difficult decisions: Which stores to close? Which appliances to stop offering? Which jobs to cut?
One year later, the companys finances are stabilized, its lowest-performing stores are closed and new products are in the showrooms. And although Player had to cut his workforce by more than half, the company now plans to start hiring again.
And within the next week, Queen City will officially exit bankruptcy, under the terms of a court-approved settlement that reduces debt and eases the companys lease terms.
Player says he learned some hard lessons from the downturn: Pay attention to data. Make adjustments quickly. And dont wait too long to seek help.
Through it all, he said, one asset was crucial: support from the community.
When youve been around as long as we have, you get cards from people ... that say, Were pulling for you. What can we do to help? Player recalls. (I said), Tell all your friends to buy from us.
Three generations, 61 years
Players father, the late Woody Player, started the company in 1952 on East Second Street uptown. He named the shop Queen City Television Services Co. still the companys corporate name and he worked on black-and-white TVs.
Before long, Queen City was not only repairing TV sets but selling them, too. The elder Player was one of the first merchants to bring color television to the Charlotte market. Eventually Queen City expanded to other appliances.
Roddey Player, 50, was young when his dad introduced him to the business. Dad would drag us to the office Saturday mornings when school wasnt in session to help us learn as much about the business as we could, he said. Young Roddey would file paperwork, clean displays and help in the warehouse.
Sixty-one years later, the business is still family-owned, and three generations of Players work there, including Roddeys niece and mother, Frances, who (in her early 80s) still works a full week.
There were warning signs in the data
The company peaked at 14 stores in 2006, two years before the start of the recession and housing crisis a catastrophe that sent appliance retailers nationwide into a frenzy. Their flush customer bases of the 1990s and early 2000s were now opting to buckle down, not pay up.
Before the recession, customers whose washing machines had broken down would go ahead and buy a new washer and dryer, Player said. Now, youll probably replace the one and wait on the other.
Previously, 70 percent of Queen City customers were replacing products that still worked, while only 30 percent shopped to replace appliances that had broken down, Player said. That percentage has flipped.
Major retailers such as Mooresville-based Lowes also have felt the crunch.
Though appliances are its largest division, nearly half of Lowes appliance purchases are a result of a customers existing appliance being under duress, says Craig Webber, vice president of appliance merchandising.
And, according to data from the Association of Home Appliance Manufacturers, the number of annual appliance shipments to retailers and builders has decreased about 23 percent since 2006.
Player wishes hed seen it coming and now sees there were warning signs in the data.
It was such a fast downturn here locally that it was hard to act fast enough, Player said. We kept thinking the economy was going to get better.
By the time Queen City filed for Chapter 11 bankruptcy protection, the company had gone from 14 retail stores to six two in Charlotte, and one each in Morganton, Mooresville, Salisbury and Rock Hill.
We knew you could do it
Since filing, the appliance retailer closed underperforming stores in Mooresville and Rock Hill. Several leases on buildings they planned to close were already expiring during the restructuring period, which made the process simpler, Player said.
For the more profitable stores, Queen City renegotiated existing leases. In some cases, that meant adjusting for todays lower leasing rates.
Before the most recent downsizing began, Queen City had around 200 employees. Now it has about 90.
Those are the hard decisions that, unfortunately, a lot of us have had to face, Player said. You want to do the right thing by your employees, but if youve got a situation where eight people can get the job done, you cant have 10. ... We made sure we kept the ones that were the most valuable to us.
With four stores now, inventory is 50 to 60 percent lower than during the boom, Player said. So the company invested more inventory in the quickest-selling appliances.
Sometimes they look great on your display, ... but just because the manufacturer makes it doesnt mean its going to sell, Player said.
Player anticipates that once the company is out of bankruptcy protection, sales will increase 10 to 12 percent. Part of that reflects economists predictions that home sales, home prices and new construction will continue to grow this year, even if overall economic growth stalls.
Lately, Queen City has been inundated with a fresh batch of cards from customers. This time they offered congratulations, not condolences.
Recalls Player: The cards said, Were proud of what youve been able to accomplish. We knew you could do it.