Underhill's Furniture to close all four stores

Underhill's Furniture nearly went out of business in the 1990s when large national retail chains began selling less-expensive products made in China. Ultimately, though, it wasn't China that spelled the end for this family-owned, third-generation business.

Tuesday, CEO Tom Underhill said all four Underhill's Furniture stores in the Seattle area will close after completing going-out-of-business sales.

A slowdown in the local housing market hit the stores hard, he said, leaving fewer people with newly purchased homes to furnish and decorate.

What's more, he said, the widespread credit crunch made it difficult for many consumers to secure financing for new furniture and threatened Underhill's ability to meet expenses.

"The weakened economy has forced restrictions on our line of credit, lowering the amount we can access to such a degree that we know we cannot make it through the year," Underhill said in a statement. "Therefore, the decision was made to completely close Underhill's and liquidate all assets to pay off the bank and our vendors."

The stores — in downtown Bellevue, Lynnwood, Totem Lake and Redmond — will close at the end of March, as will a 55,000-square-foot warehouse in Woodinville. All told, about 40 people will lose their jobs.

Tom Underhill's son Josh will form a new company under the name Josh Underhill's Family Furniture and reopen in April at the Lynnwood site, 3930 196th St. SW. He has no plans to reopen at the other locations, putting a total of about 53,000 square feet of leased retail space on the market.

Data from the Washington State Economic and Revenue Forecast Council suggest Underhill's is not alone in its struggles to sell furniture.

Tax payments by statewide furniture stores filing electronically from Dec. 11 to Jan. 10 — a key indicator of November sales — declined 18.2 percent from a year ago. Only car dealers posted a bigger drop, 26.2 percent.

"Furniture is the type of purchase people can delay, and certainly they are," Underhill said.

His late father, Frank, started selling furniture in 1946 in a tiny booth at the government-sponsored Security Market in downtown Seattle, moving a few months later to a building near the Space Needle.

In 1972, a then-29-year-old Tom Underhill took over the business and expanded it to four stores.

The stores ran into financial trouble in the mid-1990s, as larger rivals began selling less-expensive furniture from countries with lower production costs.

Underhill started a wholesale business, Tradewins, distributing China-made furniture at competitive prices to stores nationwide, including his own.

Woodinville-based Tradewins will remain in business, though it also has been hit by the recession, Underhill said.

"We're closing the books on last year in pretty good shape," he said of Tradewins. "But it looks like volume will be down 25 percent in the next two quarters."

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com