True Value Hardware Store Files for Bankruptcy After 75 Years

True Value Hardware Chain Seeks Chapter 11 Protection After 75-Year Run

The facade of a True Value store | ©Image Credit: True Value Company
The facade of a True Value store | ©Image Credit: True Value Company

True Value, a storied name in the hardware wholesale sector, has filed for Chapter 11 bankruptcy, marking a significant turning point in its 75-year history.

Why did True Value File for Bankruptcy?

According to Reuters, True Value initiated the bankruptcy proceedings to facilitate a purchase agreement with its home improvement rival Do It Best, which has offered to acquire True Value for $153 million in cash.

True Value’s court filings reveal that the hardware store chain has been adversely impacted by declining sales, a trend that has also affected other businesses within the industry. The company’s total liabilities are estimated to be between $500 million and $1 billion.

“We determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future,” said Chris Kempa, CEO of True Value, in a statement. “We believe that entering the process with an agreed offer from Do it Best, who has a similar decades-long history in the home improvement space and also operates with a focus on supporting members and helping them grow, is the most beneficial next step for True Value.”

What Will Happen to True Value Stores?

Despite the bankruptcy filing, all of True Value’s 4,500 stores will remain open during the bankruptcy proceedings because they are independently owned.

True Value’s Purchase Agreement with Do It Best

True Value’s agreement with Do It Best designates the latter as a “stalking horse” bidder. This means that while Do It Best is currently the leading bidder, True Value remains open to receiving more favorable offers.

In addition to the $153 million cash offer mentioned above, the purchase agreement between the two wholesalers includes Do It Best assuming approximately $45 million in contracts and other obligations, while also committing to hiring some of True Value’s employees.

In its own press release about the acquisition, Do It Best said that if the purchase agreement push through, it would result in a global network of over 8,000 stores across the United States and more than 50 countries. The deal is expected to close by the end of the year.

Commenting on Do It Best’s acquisition of True Value, Do it Best President and CEO Dan Starr said, “We understand the unique challenges of the retail industry, and if we are successful in our bid for these assets we would be committed to driving True Value stores’ growth alongside our valued Do it Best member-owners. This acquisition would represent not just the growth of Do it Best but a brighter future for the entire independent home improvement channel.”

True Value Joins Growing List of Retailers Filing for Bankruptcy

Struggling with declining sales amidst rising costs and a downturn in consumer spending, True Value becomes the latest company to join a growing number of prominent retail and restaurant chains that have filed for bankruptcy since the pandemic. The list includes LL Flooring, Red Lobster, Rite Aid, Bed Bath & Beyond, and Christmas Tree Shop. Recently, discount retailer Big Lots followed suit, announcing its bankruptcy proceedings in July and subsequently closing hundreds of stores.

Other retailers responded to declining sales by closing underperforming locations. Hooters, Walgreens, Sears, Kmart, J.C. Penney, and even Disney Stores have shuttered locations across the country since 2020.

Sources: Reuters, USA Today