McMahan's Furniture

McMahan's Furniture

Company type	Private
Industry	Retail (Furniture)
Founded	1919
Defunct	2008
Fate	Liquidation
Headquarters	Santa Monica, California , United States
Area served	California, Arizona, New Mexico, Texas, Nevada, Colorado, Oregon
Key people	James A. "Jay" McMahan (president)
Products	Home furnishings

Overview

McMahan's Furniture operated as a privately held, family-run retailer specializing in home furnishings. Established in 1919 in Bakersfield, California, the company expanded its presence across multiple states, including California, Arizona, New Mexico, Texas, Nevada, Colorado, and Oregon. By 2008, McMahan's maintained 17 store locations primarily serving the western region of the United States. The business was headquartered in Santa Monica, California and was led by president James A. "Jay" McMahan.

The retailer's revenue reached approximately $45 million in 2007. A significant portion of its sales was generated through credit offerings extended to its clientele. Despite its longstanding history and regional footprint, McMahan's Furniture ultimately ceased operations and entered liquidation in 2008.

History

The inaugural McMahan's store commenced operations in 1919 in Bakersfield, California. In 1993, Heilig-Meyers acquired 92 McMahan's outlets for $65 million. Three years later, in 1996, Heilig-Meyers sought to purchase an additional 20 stores from McMahan's; however, it remains unclear if this transaction was finalized. By 2006, three of the remaining locations had been shut down. Ultimately, the final 17 stores—including two La-Z-Boy Furniture Gallery branches located in California and Oregon—ceased operations in 2008. According to an official company statement, unfavorable macroeconomic factors were primarily responsible for this closure:

McMahan’s Furniture announced on August 26, 2008, that it would discontinue its furniture business within the forthcoming months. Despite implementing multiple strategies to adapt to the prevailing market conditions, the prolonged economic downturn has led to a sustained decline in demand for home furnishings.

While McMahan’s had previously navigated through economic downturns successfully, the ongoing slump beginning in late 2006 proved more severe and enduring than any prior challenges faced by the company.

Lawsuit

In 1975, a water main ruptured near McMahan's Santa Monica location. Subsequently, the company and its insurer, Aetna, filed suit against the city under the doctrine of inverse condemnation. They requested that the jury be instructed to calculate compensation for merchandise losses based on the retail value minus average discounts. The court declined this instruction, resulting in the jury awarding damages equivalent to wholesale value instead. This ruling was affirmed upon appeal. The appellate court referenced a legal restatement indicating that damages for anticipated profits by either wholesale or retail dealers are generally not recoverable. This case is recognized as a significant precedent in California tort law concerning inventory valuation.